Making an aggressive bid, the country”s largest power producer NTPC on Thursday announced acquisition of the government”s entire stake in two hydropower producing companies – THDC India and North Eastern Electric Power Corporation Ltd (NEEPCO) – for a total consideration of Rs 11,500 crore.
The company informed the exchanges that it signed share purchase agreement on Wednesday to buy central government”s entire 74.496 per cent stake of THDC for an aggregate consideration of Rs 7,500 crore. Similarly, NTPC has also acquired entire 100 per cent government stake in NEEPCO for Rs 4,000 crore.
The transaction was earlier cleared by the competition regulator after the Cabinet Committee of Economic Affairs (CCEA) had given its nod last year. SEBI has treated acquisition as a related party transaction and this exempted the deal from its open offer provisions.
The Centre held entire 100 per cent stake in NEEPCO that operates close to 1,500 MW of power plants in the northeastern region, and has 75 per cent holding in THDC. The Uttar Pradesh government holds the balance 25 per cent stake in THDC India.
NTPC paid Rs 11.08 per share of NEEPCO and Rs 2,746.31 per share of THDC. Both companies are not listed on exchanges.
The stake sale would be only disinvestment proposal this year where a state-owned entity would pick up government equity in another public sector undertaking (PSU).
“NEEPCO and THDC fits into the scheme of things for NTPC that has grown its coal-fired capacity but is yet to get into the big league on renewables. The takeover of the two hydropower generating companies would give a foothold to NPTC in the northeastern region while also allow synergies with several of its plants in the north of the country,” said an official source.
Earlier, NTPC was looking at buying the Centre”s stake in Sutlej Jal Vidyut Nigam Ltd (SJVNL). But despite its interest, the deal could not go through as the Himachal Pradesh government, which also had a minority stake in the hydro company, refused to part with its shares.
The government has identified NTPC for this strategic sale of its equity as it would add value to country”s largest shareholder and help the Centre by way of higher dividend payouts. Moreover, NTPC has a stable operational record and decent cash reserve, that could make these buys easy.