While Indian companies are drawing up ambitious plans to monetise assets to pare debt on their books at a time foreign investors are keenly eyeing India, not all of these may eventually materialise. In the first casualty to corporate India’s plans to de-leverage itself, the biggest foreign direct investment deal by value announced in 2014 so far has fallen through. The acquisition of Jaiprakash Power Ventures’ two hydropower plants by Abu Dhabi National Energy (TAQA) in March has fallen through.
The deal was expected to fetch Rs 9,689 crore (enterprise value) with which the Jaypee Group intended to reduce debt of around Rs 58,000 crore across the books of its companies. Had the deal gone through, it would have led to a cash inflow of around Rs 3,820 crore into the Jaypee Group and helped bring down debt by Rs 5,869 crore, according to a June 2014 group investor presentation.
“They (TAQA) have… stated that they have been constrained to take the said decision as a result of a change in the business strategy and priorities of the group,” JP Power said in a statement to the bourses on Thursday.
“We may add here that such withdrawal makes TAQA liable to payment of break fee in terms of the said acquisition agreement,” the statement added.
The agreement followed the signing of the UAE-India Bilateral Investment Promotion and Protection Agreement in December 2013 and a commitment made by the UAE to invest $2 billion in India’s infrastructure space.
An email sent to TAQA’s spokesman in Abu Dhabi on Thursday didn’t elicit any response till the time of going to press. He didn’t answer phone calls and messages either.
Jaiprakash Power’s share slumped 7.02% on the BSE on Thursday to close at Rs 19.20. Jaiprakash Associates lost 6.06% to close at Rs 62 per share on the BSE. The bourse’s benchmark Sensex gained 0.48% to close at 26,271.85 points.
In a separate statement issued after market hours, Jaypee Group chairman Manoj Gaur said that TAQA’s decision to withdraw from the deal would not impact his group’s commitment to pare debt to Rs 45,000 crore by March 2015. “We have created valuable assets and we are confident to get investors to help us raise funds in the near future,” Gaur said.
It had been reported in June that the state government of Himachal Pradesh, where both the hydropower