India’s NCC to sell power asset stake to Sembcorp

The $52m deal marks the third divestment by the Indian developer within a year as it seeks to reduce debt.

NCC Infrastructure, a subsidiary of Indian developer NCC Limited, has agreed to sell its stake in Sembcorp Gayatri Power to Singapore's Sembcorp Utilities for INR3.52 billion ($52.7 million; €46.8 million).

Sembcorp Gayatri Power, formerly known as NCC Power Projects, is now developing a 1,320MW coal-fired power project in Andhra Pradesh. The facility is part of the Sembcorp Gayatri Power Complex, which has a total installed capacity of 2,640MW. 

The first phase of the complex, now completed, is starting operations. The project is the largest foreign direct investment-driven project on a single site in the thermal energy sector in the country, at a total project cost of $3 billion.

The transaction is expected to help NCC straighten its balance sheet. The Hyderabad-based company's debt pile currently stands at INR22 billion, according to reports. US-based Blackstone holds a 9.9 percent stake in NCC.

The deal will see Sembcorp emerge as the majority shareholder in the power project with an 88 percent stake. It will manage the plant along with Gayatri Projects, it said in a statement. 

The purchase of shares from NCC Infrastructure will be conducted in two tranches, with Sembcorp to convert the Fully and Compulsory Convertible Debentures. Sembcorp said that the purchase will total about INR6.5 billion, to be financed by a mix of internal funds and borrowings. 

The transaction is expected to complete in the second quarter of 2016. 

Earlier in January, NCC fully exited Western UP Tollway, an Indian operating toll road, to Cube Highways and Infrastructure, a Singapore-based portfolio company jointly owned by I Squared Capital and International Finance Corporation, for about $85 million. 

Last month, NCC also sold its majority stake in Bangalore Elevated Tollway to Indian investment manager IDFC Alternatives for around $109 million.