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Race for investment in JP Power ahead of parent auction today
iStock
Synopsis
Adani Power, Kotak Alternate Assets, Vedanta, and Oaktree are vying for JP Power's ₹3,800 crore CCPS, potentially gaining a 25% stake and triggering an open offer for a controlling share. This move could give the winning bidder an edge in acquiring parent company Jaiprakash Associates, which is up for auction with a base price of ₹12,000 crore.
Marquee corporates Adani Power, Kotak Alternate Assets, Vedanta and Oaktree are among the players to bid for an investment in JP Power's compulsorily convertible preference shares (CCPS) worth ₹3,800 crore ahead of Friday's electronic auction for its parent company Jaiprakash Associates, according to multiple people aware of the matter.
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The winning bidder for JP Power's CCPS could have an advantage in the bidding process for Jaiprakash Associates because the power arm has valuable assets and linkages to the parent.
The CCPS upon conversion could provide the winning bidder with a 25% stake in JP Power. The conversion will trigger an open offer for a further 26% stake in the company, as per the regulator Sebi's guidelines. Effectively, the winning bidder could come to own over 51% stake in JP Power and become a controlling shareholder.
Jaiprakash Associates owns a 24% stake in JP Power.
The CCPS are owned by a group of lenders led by ICICI Bank.
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Some of the four bidders for the CCPS are expected to participate in the auction for parent company Jaiprakash Associates on Friday.
They include Adani Group and Vedanta.
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Jindal Power, which is also likely to participate in Friday's auction, did not submit a firm bid for JP Power's compulsorily convertible preference shares. However, they have made a conditional offer, sources said.
The group of lenders led by ICICI Bank could recover the entire amount of ₹3,800 crore or the face value of the CCPS, as per sources.
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Adani Power, Kotak Alternate Assets, Oaktree Capital, Vedanta and Jindal Power did not respond to ET's queries. ICICI Bank also did not reply to an email seeking comments.
Bidding for Jaiprakash Associates will open on Friday with a base price of ₹12,000 crore.
ET had first reported on July 29 that the creditors of JP Power were looking to sell the CCPS that they had been allotted as part of a debt restructuring of the power company in 2019.
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JP Power has operational thermal and hydro power plants with 2.2 gigawatts of electricity generation capacity.
The company had operating profits of ₹2,200 crore in financial year 2023-24.
The company had operating profits of ₹2,200 crore in financial year 2023-24.
