Tata Power’s wholly owned subsidiary Khopoli Investments Ltd. has executed a share purchase agreement with Exxaro Resources Ltd. for the divestment of the company’s entire 50% stake in Cennergi, a South African joint venture, for$106 million subject to normal working capital and other adjustments.
“The agreement will be subject to, amongst others, normal regulatory approvals customary for this type of transaction. Cennergi (Pty) Ltd. is a 50:50 joint venture between Exxaro Resources Ltd. and Khopoli Investments Ltd.,” said Tata Power in a statement.
Exxaro is a leading South African coal producer and under the agreement, Exxaro will acquire the entire 50% shareholding of Khopoli Investments Ltd.
The agreement is likely to be completed by Q3FY20 and post this transaction, Exxaro would have 100% ownership of Cennergi.
Monetising asset
“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,” said Praveer Sinha, CEO and MD, Tata Power.
“The proceeds from such 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.
Cennergi owns two wind farms in South Africa — Amakhala Emoyeni (with a generation capacity of 134.4 MW and 95% shareholding) and Tsitsikamma Community Wind Farm (with a generation capacity of 95.3 MW and 75% shareholding). Each project has a 20-year power purchase agreement (PPA) with the State power utility Eskom. “The collaboration between Exxaro and Tata Power over the past seven years to develop these projects to their current status has been commendable,” and an outstanding success in South Africa’s implementation of its energy strategy. As a South African-based company, Exxaro is pleased with this opportunity to consolidate its interest in this renewable energy asset at a time in South Africa where we need energy security as we respond to increasing negative sentiment towards coal-based electricity generation,” said Mxolisi Mgojo, CEO, Exxaro Resources.
Tata Power shares on BSE closed down 0.62% at ₹63.95 in a weak Mumbai market on Tuesday.
Published - September 17, 2019 10:34 pm IST
