Infrastructure major GMR Group today said it will divest its 70 per cent stake in GMR Energy (Singapore) Pte (GMRE) to FPM Power for SGD 660 million (Rs 2,907 crore).
"GMR Group has entered into a share purchase agreement on March 4 to sell its 70 per cent interest in GMRE to FPM Power Holdings Ltd for a total equity value of SGD 660 million," the company said in a statement.
The company said that the agreement was in line with its "Asset Light, Asset Right strategy" under which it followed the principle of develop, build, create, value and divest.
Of the SGD 660 million, FPM Power will invest SGD 60 million in GMRE as balance equity.
"This divestment of our stake results in a profit of Rs 1,356 crore and releases capital amounting to Rs 1,616 crore," it added.
The transaction is subject to approval from project finance lenders to GMRE, it said, adding, "the sale translates to an enterprise value (100 per cent basis) for GMRE of SGD 1,612 million on project completion by end 2013".
GMR Group Chairman G M Rao said: "GMRE is a solid testimony of GMR's ability to identify a good opportunity, develop and execute a world class power project of high efficiency in a developed country like Singapore. The project is completely on schedule and within budget."
GMRE is a company established for construction, operation and maintenance of a 2X400 natural gas fuelled power plant on Jurong Island, Singapore.
The GMRE power plant, the company said, is nearly 96 per cent complete and expected to commence operations by the end of 2013. GMR Infrastructure (Singapore) owns 66.4 per cent of GMRE and 3.6 per cent is held by GMR Infrastructure. The balance 30 per cent stake in GMRE is held by PETRONAS, which will continue to stay invested.
FPM Power, on the other hand, is a 60:40 joint venture established between First Pacific Company Ltd and Meralco Power Gen Corporation, a wholly owned subsidiary of Manila Electric Company.
GMR Infrastructure scrip closed at Rs 18.80, up 4.74 per cent from the previous close on the BSE.