Five Bidders In Fray For 30% Stake In Jaiprakash Power

Jaiprakash Power Ventures Ltd. has received interest from five large investors for a planned 30 percent stake sale as the heavily indebted group looks to shed some of its assets.

The bidders include Canada's Brookfield Asset Management, Srei Group's India Power Ltd, Resurgent Power Ltd, Edelweiss Asset Reconstruction Co Ltd and JSW Group, two people directly involved in the sale process told BloombergQuint on condition of anonymity. The bids were submitted after presentations were made by the investors on Monday.

Interest in Jaiprakash Power Ventures' assets from domestic as well as international investors bodes well for India's banking sector struggling to rid itself of stressed loans and for the Manoj Gaur-led Jaypee Group, which has been trying to sell assets to cut debt. Jaiprakash Power Venture's total debt stood at Rs 12,439.8 crore as on June 30, with most of it extended by domestic lenders, as per information in its 2016-17 annual report.

Bad loans on the books of listed Indian banks crossed the Rs 8 lakh crore mark in June and is expected to worsen as September quarter results are announced.

The Stake Sale Timeline

A consortium of 24 lenders, led by ICICI Bank, is driving the stake sale. In August, lenders had appointed SBI Capital Markets Ltd. and global consulting firm EY to run the sale process for the company. The two firms sought expression of interest from potential buyers in September.

Lenders to Jaiprakash Power will now assess the bids, after which the shortlisted investors will be allowed to scrutinise the power company's books, according to the first of the two people quoted above.

Brookfield, JSW Group, Edelweiss ARC and SBI Capital Markets did not respond to BloombergQuint's emailed queries. Tata Power, which owns 25 percent stake in Resurgent Power, did not respond to a query. Hemant Kanoria, chairman, India Power, said he could not immediately confirm the development.

Lenders had acquired the equity stake in Jaiprakash Power Ventures following a Strategic Debt Restructuring in February. SDR allowed banks to acquire 51.8 percent stake, by converting Rs 3,058 crore worth of loans into stock, according to the company's annual report.

Under the SDR process, banks which have taken control of the majority stake in a company are allowed to sell it to worthy buyers in two tranches. The first tranche has to represent at least 26 percent stake in the company, according to norms released by the Reserve Bank of India.

Jaiprakash Power has an operational portfolio of around 2,200-megawatt power projects. The company also owns stake in a 2,000 MW thermal plant and in an entity which owns and operates a 214-kilometre 400 KV transmission line, according to the information released by SBI Capital and EY.