JSW Energy has agreed to acquire GMR Kamalanga Energy (GKEL), the holding company of a 1.05GW thermal power plant in Odisha, India, for INR53.21bn ($750m).

In this connection, the Indian power company has signed a share purchase agreement with GMR Energy to acquire the latter’s stake held in GKEL. The remaining stake in GKEL owned by IIF and IDFC First Bank will be procured by GMR Energy to enable JSW Energy to acquire 100% in the former.

Built in the Dhenkanal district, the GKEL power plant is currently made up of three coal-fired units of 350MW each. The coal-based power plant, which has been operating since 2013, has been designed to facilitate a fourth unit of 350MW capacity.

JSW Energy will expand its presence in the eastern region of India

For JSW Energy, the acquisition of the GKEL thermal power plant helps it to grow its portfolio and diversify its fuel mix, geographical presence, and also off-take arrangements.

Post-acquisition, the company’s total installed power generation capacity will move up to 5.6GW, while expanding its footprint in the eastern part of India.

According to GMR Energy, the GKEL plant is one of the first few independent power plants to be brought online under India’s Mega Power Policy. The GKEL power plant is in close proximity with coal mines, said GMR Energy, which is a joint venture between Indian infrastructural company GMR Group and Malaysia’s Tenaga Nasional Berhad (Tenaga).

The power produced by the GKEL thermal power plant is sold to GRIDCO (Odisha), Uttar Haryana Bijli Vitran Nigam, (UHBVNL), and the Bihar State Electricity Board.

The sale of the power plant will help GKEL to pay off its entire debt of INR41.41bn ($580m).

GMR Group energy and international airports chairman Srinivas  Bommidala said: “As we rebalance our portfolio, divestment of GKEL will help reduce the indebtedness of our group and strengthen our balance sheet.

“It will also help release significant management bandwidth to focus our energies on new growth areas.”

The closing of the deal will be subject to customary regulatory and other approvals.