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).
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.
If 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.