GMR Group on Monday said it had signed a share purchase agreement to sell 70 per cent stake in its Singapore arm GMR Energy (Singapore) to FPM Power Holding Ltd. for Singapore $660 million (about $529 million) in line with its change in strategy to the ‘Asset Light’ model announced last year. “The GMR Group has entered into a share purchase agreement on March 4, 2013, to sell its 70 per cent interest in GMR Energy (Singapore) to FPM Power Holdings Ltd. for a total equity value of S$660 million,” GMR Group said in a statement.
Balance equity
Out of this, FPM Power would invest S$60 million in GMR Energy (GMRE) as the balance equity, it added.
The move will result in a profit of Rs.1,356 crore for the Bangalore-based firm.
“The divestment is the off-shoot of the group’s well thought out strategy of an asset right-asset light and cash flow-based model that the group has embarked in the recent times,” Group Chairman G. M. Rao said.
This is the second such strategic move after last month’s divestment of 74 per cent stake in the GMR Jadcherla road project at a premium. The cash flows would help GMR Energy to focus on domestic energy business and accelerate ongoing projects totalling to 5,790 MW, he added.
Finance lenders
The transaction, however, is subject to approval from project finance lenders to GMRE and is expected to close by end of March, 2013.
FPM Power is a 60:40 joint venture between First Pacific Company Ltd. and MERALCO Power Gen Corporation.
GMR Group’s consolidated net loss had doubled to Rs.217.45 crore for the quarter ended December 31, 2012, largely due to higher interest burden and marginal revenue growth.
