ICICI fund said to be in talks to acquire Avantha Power unit

Mumbai: A fund being set up by ICICI Bank Ltd’s private-equity arm and Tata Power Co. is in advanced talks to acquire an electricity project from Avantha Power and Infrastructure Ltd, people familiar with the matter said.

The fund is in discussions to acquire Avantha’s Jhabua Power Ltd unit and could reach an agreement on deal terms in the next month, one of the people said, asking not to be identified as the talks are confidential. The purchase may value the business at as much as Rs.4,500 crore including debt, the people said.

Avantha Power, backed by businessman Gautam Thapar, has been selling power projects as it seeks to reduce debt. It agreed in March to sell the Korba West power project in Chhattisgarh to Adani Power Ltd for an enterprise value of Rs.4,230 crore.

ICICI Venture Funds Management Co., owned by India’s largest private-sector lender, and Tata Power are setting up a fund of at least $750 million targeting investments in the power sector, one of the people said. Tata Power, which said in March it’s seeking to acquire distressed assets to bolster capacity, would operate the electricity projects the fund purchases, according to the person.

Acquiring Jhabua Power would give the fund control of a 600-megawatt plant in Madhya Pradesh that is nearing completion, the people said. Jhabua Power also has another 660 megawatts of capacity still under construction, according to Avantha’s website. The unit has about Rs.3,000 crore of debt, the people said.

Two other Indian companies have also been in talks to buy Jhabua Power, though discussions with the ICICI fund are the most advanced, the people said. ICICI Venture and Tata Power declined to comment in e-mailed statements. Shravani Dang, a spokeswoman for Avantha Group, didn’t immediately respond to e- mailed queries.

Avantha Group’s listed arms Crompton Greaves Ltd and Ballarpur Industries Ltd both hold stakes in Avantha Power.

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