Kalpataru’s equity holding in Kohima Mariani Transmission is 74% and balance 26% equity is held by Techno Electric & Engineering Company.
In a bid to unlock capital and pare debt, Kalpataru Power Transmission (KPTL) announced on Wednesday it had entered into binding agreements with CLP India to sell stake in three of its power transmission assets — Kalpataru Satpura Transco (KSTPL), Alipurduar Transmission (ATL) and Kohima Mariani Transmission (KMTL) — for an estimated enterprise value of Rs 3,275 crore.
This transaction marks the entry of CLP India into the power transmission business. CLP India is owned by the Hong Kong-based CLP Group and Caisse de dépôt et placement du Québec (CDPQ), one of Canada’s leading institutional fund managers. Commenting on the deal, CLP India managing director Rajiv Mishra said: “India is a primary growth market for CLP and CDPQ, and the two companies share a vision to invest in a low-carbon, clean energy portfolio in India. The acquisition of the KPTL assets will enable us to expand our geographical reach across the country and reinforce our commitment to grow our investments.”
Two of these assets —KSTPL and ATL — are wholly-owned subsidiaries of the company.
Kalpataru’s equity holding in Kohima Mariani Transmission is 74% and balance 26% equity is held by Techno Electric & Engineering Company. Kalpataru said in respect of ATL and KMTL, the divestment will happen post the achievement of commercial operation date (COD). The estimated amount of debt at the SPV level would be approximately Rs 2,000 crore at the time of COD.
KPTL MD and CEO Manish Mohnot said the sale of assets will lead to a significant reduction in KPTL’s consolidated debt and will help focus on strategic diversification within core business. “KPTL will continue to focus on sustainable and profitable growth with commitment to improve return ratios,” he said.
An SBICAP Securities research report on Kalpataru Power dated June 27, 2019, states that while ordering has remained firm in railways, pipeline, and international transmission and distribution (T&D), domestic T&D has been lackluster in FY19. “This is set to improve in FY20 given the expectations of green energy corridor orders as the government has reaffirmed its 175GW revised estimate (RE) target. This has heightened hopes of about 20% inflow growth in FY20,” the report said.
Over the last couple of years, CLP India has decided to focus on the transmission and renewable energy projects. It owns sixteen wind energy projects and three solar energy projects across seven states. The company also owns a coal·fired power plant in Haryana and a gas based combined cycle power plant in Gujarat.
Naveen Munjal, director – business development & commercial (conventional), CLP India, said the firm has had the intent of entering this segment for some time. “With our shareholders’ strategic backing and financial support, we intend to pursue a faster pace of growth to a more diversified portfolio,” he said. Ernst & Young (EY) and Khaitan & Co are advisers to KPTL and Techno for this transaction.
Kalpataru has been making acquisitions this year. On Tuesday, Kalpataru had indicated that it signed a definitive agreement with Tano India Private Equity Fund II (Tano) to acquire 19.94% stake in Shree Shubham Logistics (SSL) for a consideration of Rs 64.66 crore. Post this, Kalpataru’s stake in SSL increased to 100%. Prior to that, in March this year, the company announced that it is set to acquire Linjemontage i Grastrop AB, a Swedish EPC company along with its two wholly owned subsidiaries. In the quarter-ended March, Kalpataru Power recorded a 30.57% increase in its standalone net profit at Rs 136.88 crore on revenues of Rs 2,491.43 crore. Shares of Kalpataru ended Wednesday’s trading session down 0.5%, at Rs 529.15 on the BSE.