GAIL frontrunner in race to but IL&FS’ energy assets

Mumbai: State-run gas utility Gas Authority of India Limited (GAIL) is apparently the frontrunner in the race to buy stressed Infrastructure Leasing and Financial Services’ (IL&FS) energy assets, two people aware of the development said. The assets put up for sale are expected to fetch Rs 6,000-8,000 crore for IL&FS. If GAIL manages to clinch the deal, it will get a controlling stake in the wind power generating plants with an aggregate capacity of 873.5 MW and those under construction with a combined capacity of 104 MW. Solar power plants and projects of about 300 MW that are still being developed have also been put up for sale.

Orix gets right of refusal

According to a source, “GAIL India is the front-runner to buy energy assets while Japanese investor Orix reserves the right of refusal to buy the stake if the valuation falls below a particular price.” Orix owns 49 percent in the energy assets that have been put up for sale. “The approximate value of the asset is around Rs 6,000 crore and the deal will help pare debt by Rs 5,000 crore,” another source said.

22 EoIs received so far

Even though IL&FS has received expression of interest (EoI) from 22 investors, including Global Infra partners, KKR, Brookfield, I Squared Capital and Macquarie, to buy the renewable energy assets, the response in terms of binding bids has been poor. The company spokesperson said that bids have been received and are being processed.

The plan

IL&FS has a debt of around Rs 91,000 crores. The subsidiaries are part of a resolution plan for the group. The IL&FS Group submitted a status report to courts, categorising assets into red, green and amber. By selling stake in subsidiaries, IL&FS aims to pare its debt.