An Indian infrastructure fund has reportedly initiated early talks to acquire a 49.5% stake in the ONGC Tripura Power Company (OTPC).
Indian government-owned The National Investment and Infrastructure Fund (NIIF) has reportedly offered a deal valued at $204m (Rs15bn).
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OTPC owns a 726.6MW natural gas-based power plant in Palatana, Tripura. This supplies power to regions of north-east India with an energy deficit.
Two people with knowledge of the matter told The Economic Times that NIIF is planning to buy a 26% stake from Infrastructure Leasing & Financial Services (IL&FS). It also plans to buy a 23.5% stake from Global Infrastructure Partners (GIP), a US-based infrastructure investment fund.
The largest stakeholder in OTPC is said to be Oil And Natural Gas Corporation (ONGC) with a 50% stake. At the same time, the government of Tripura holds the smallest stake of 0.5%.
The two sources said other investors are also keen to acquire a stake in OTPC, and the final bids will be released in October this year.
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By GlobalDataIf the talks are successful, this would mark NIIF’s first investment in the conventional energy sector. Spokespersons for NIIF and IL&FS declined to comment on the reports.
OTPC first invited expressions of interest for a 26% stake in May this year. The stake is currently owned by IL&FS Financial Services and IL&FS Energy Development Corporation.
To assist the divesture of the stake, IL&FS is believed to have appointed Arpwood Capital and JM Financial. GIP reportedly hired Rothschild to divest its stake in OTPC, the newspaper reported.
As per IL&FS notification, 86.5% of the energy generated by OTPC is supplied under a long-term power purchase agreements. It also has a gas supply agreement with ONGC.
In July this year, India’s electric power distribution company NTPC signed a memorandum of understanding with NIIF through National Investment and Infrastructure Fund Limited to explore investment opportunities in Indian renewable energy as well as power distribution segments.
