MUMBAI: GautamAdani-led Adani Group and Sajjan Jindal-owned JSW Group are vying to buy a majority stake and take management control in Delhi-based Monnet Power from Sandeep Jajodia’s Monnet Ispat and Energy for $500 million (over Rs 3,100 crore), edging out Tata Power and an international player from the race, said sources in the know of the development.
The deal, likely to be sealed in April, will help the promoters reduce debt of Monnet Ispat, which stood at Rs 10,000 crore as on March 31, 2014. The acquisition, if it materializes, will mark further consolidation in the power sector that has seen deals worth $4 billion since the Narendra Modi-led NDA government came to power in May last year.
Confirming the move, Jajodia, chairman and MD, Monnet Ispat, told TOI, “We have signed non-confidentiality agreements with buyers so won’t be able to comment but the deal is likely to be sealed in April. Monnet Power has 1,050 MW coal-based power plants at Angul in Odisha and has plans to add 660 MW at the same site.”
Monnet Power, earlier this month, bagged Utkal C coal block in Odisha for Rs 770 a tonne, or an estimated Rs 9,537 crore, for extractable reserve of 124 million tonnes, a development that likely to increase the company’s valuation, said an analyst, adding that both Adani and Jindal were in the race to buy this mine along with a dozen other players.
Adani and Jindal didn’t take calls or respond to texts by TOI. However, Sanjay Sagar, joint managing director and CEO, JSW Energy confirmed that the company is conducting due diligence on Monnet Power.
The JSW Group is learnt to have offered up to Rs 4,000 crore to buy Monnet Ispat’s power unit along with its sponge iron unit in Odisha. However, Jajodia, who is married to Jindal’s sister, is willing to part only with the power unit and wants to retain the sponge iron unit, said sources.
The Adani Group, which was earlier looking to set up 2500 MW power plant in Odisha from coal reject, or residues after washing the fuel, from its two mines in the state is now looking to buy out existing power units in the state, with Monnet Power being one of them.
Both Jindal and Adani are looking to consolidate their power play. The Adani Group, already India’s largest private sector power firm with capacity of 11,000 MW, plans to become a 20,000 MW player by 2020 while the JSW Group plans to buy 4000 MW of stranded power assets to reach a capacity of 12,000 MW in coming years.
Shares of Monnet Ispat and Energy closed down 2% at Rs 53, valuing the company at Rs 346 crore.
