GMR exits Singapore power plant, makes Rs 1,356 Cr profit

GMR Group announced it would sell its 70 per cent stake in the Island Power Project in Singapore to FPM Power Holdings for S$660 million. The company is expected to make a profit of Rs 1356 crore which it will use in its domestic energy business where it is currently developing power projects totalling 5,790 megawatts.
 
According to a statement released by GMR, the group has entered into a Share Purchase Agreement (SPA) on March 4 to sell its 70 per cent interest in GMR Energy (Singapore) Pte Ltd (GMRE) to FPM Power Holdings Limited (FPM Power) for a total equity value of S$660 million. Out of this, FPM Power will invest S$60 million in GMRE as the balance equity. This sale translates to an Enterprise Value (100 per cent basis) for GMRE of 5$1,612 million (US$1,293 million) on project completion by end 2013. The transaction is subject to approval from project finance lenders to GMRE and is expected to close by end of this month. This divestment of  stake results in a profit of Rs. 1356 crore (S$ 307 million) and releases capital amounting to Rs. 1616 crore (S$ 366 million).”
 
GMRE is a company established for the construction, operation and maintenance of a 2×400 MW (gross) Natural Gas fuelled power plant on Jurong Island, Singapore. The GMRE power plant is nearly 96 per cent complete and expected to commence operations by the end of 2013. GMR Infrastructure (Singapore) Pte Ltd owns 66.4 per cent of GMRE and 3.6 per cent is held by GMR Infrastructure Limited. The balance 30 per cent stake in GMRE held by PETRONAS who will continue to stay invested in the project. FPM Power is a 60:40 Joint Venture established between First Pacific Company Limited and MERALCO Power Gen Corporation, a wholly-owned subsidiary of Manila Electric Company.
 
G. M. Rao, Group Chairman, stated, "The disinvestment is the off-shoot of the group's well thought strategy of an asset right – asset light and cash flow based model that the group has embarked in the recent times. This is the second such move after last month's divestment of 74 per cent stake in the GMR Jadcheria road project at a premium.”
 
The cash-strapped Indian group has been looking to divest stakes in non-core assets since last year. “The cash flows will help GMR Energy to focus on our domestic energy business & accelerate ongoing projects totalling to 5790 MW,” Mr. Rao stated.
 

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