Global funds buy RIPL debt at discount

Global funds led by Goldman Sachs and Varde Partners have bought ₹6,584 crore debt of RattanIndia Power Limited (RIPL) for ₹4,050 crore, or a discount of 38.4%, from a consortium of lenders led by Power Finance Corporation and the SBI.

This makes it the first successful scheme to have been closed under RBI’s Prudential Framework for resolution of Stressed Assets issued on June 7, 2019 and the largest in terms of size outside the NCLT framework attracting global investors without any change in the existing management.

“RIPL has closed a one-time settlement scheme (OTS) transaction for debt resolution with its consortium of 12 lenders to a set of new investors and lenders, led by marquee foreign funds like Goldman Sachs and Varde Partners (through the Aditya Birla ARC Limited) for ₹4,050 crore,” said a company statement.

The debt resolution comes in the backdrop of significant sectoral challenges that the Indian power sector has been undergoing in terms of dealing with stressed and non-performing assets.

Commenting on the deal, Mr. Rajiv Rattan, chairman and promoter of RattanIndia Power, said “I am firmly confident of the growth story in India and a vibrant and growing power sector will play an important role in this direction. RattanIndia Power has built world class operating plants which required a comprehensive capital structure solution. Accordingly, we have been working closely with our lenders to find a solution for resolution of the financial stress. Today, therefore, we achieved a big milestone in our history when we got marquee investors to join us in closing a one time settlement resolution with our lenders.”

The OTS process was done through an open, transparent through a global Swiss challenge auction process. While KPMG was the exclusive financial advisor to the transaction, Khaitan & Co advised on all legal related matters. This first-of-its-kind transaction in which foreign investors have replaced Indian lenders through a process of resolution outside the NCLT framework has opened new doors for fresh capital to flow into the distressed Indian power sector.

“Given that this process has attracted some of the leading international funds in the backdrop of tight liquidity conditions clearly highlights the quality of the asset and the strong reputation and standing of the promoter group led by Mr. Rajiv Rattan. The transaction also reaffirms the faith of the global investment community in the Indian economy,” said the statement.

While most deals in the power sector, resolved under the NCLT framework in the past have been settled at ₹1.2-1.5 crore per MW, this transaction closed at ₹3 crore per MW has unlocked greater value for all stakeholders.

Mr. Aman Singh, CEO of RattanIndia Power said “This debt resolution has been first-of-its-kind in the stressed power space with overseas investors investing into Indian power sector. This deal will provide a template for more such foreign investments in debt in stressed assets in the infrastructure sector. This OTS demonstrates the management’s strong resolve and commitment to enhance the operations and performance of the company.”

RattanIndia Power Ltd., the flagship company of the group currently owns two coal based power plants in Maharashtra with an aggregate capacity of 2700 MW comprising of 1,350 MW each at Amravati and Nashik.

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Printable version | Feb 17, 2020 3:01:36 AM |

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