• Thursday, March 28, 2024

Business

Tata Power arm to exit South African joint venture Cennergi for £85m

By: Radhakrishna N S

A SUBSIDIARY of Tata Power, Khopoli Investments, has announced a share purchase agreement with Exxaro Resources for the divestment of the company’s entire 50 per cent stake in Cennergi, a South African joint venture, for £85million ($106m).

Cennergi is a 50:50 joint venture between Exxaro Resources and Khopoli Investments, a wholly owned subsidiary of Indian business Tata Power, which aims to focus on the domestic market and cut its financial liabilities.

Exxaro is a leading South African coal producer.

Exxaro will acquire the entire 50 per cent shareholding of Khopoli Investments. The agreement is likely to be completed by the third quarter of the financial year 2019-2020, the Indian firm said in a statement on Tuesday (17).

Following this transaction, Exxaro will have 100 per cent ownership of Cennergi.

Cennergi, in turn, owns two wind farms in South Africa – Amakhala Emoyeni with a generation capacity of 134.4 MW and 95 per cent shareholding, and Tsitsikamma Community Wind Farm with a generation capacity of 95.3 MW and 75 per cent shareholding.

Praveer Sinha, Chief Executive and Managing Director, Tata Power, said: “The decision to monetise this South African asset is in alignment with our stated strategy to deleverage the balance sheet by divesting sub-optimal size international assets.

“The proceeds from such a sale would be re-invested in emerging areas where there is a huge growth opportunity. The company will focus on renewable power, power distribution and service-led businesses in India, which will bring in greater value and help us align with the emerging consumer needs”, he added.

ABSA Bank was the sole advisor to Khopoli for the transaction.

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