Sembcorp buys majority stake in NCC Power for S$102 mln

MUMBAI - Singapore global utility services company Sembcorp has signed a deal to purchase a majority stake in NCC Power Projects for about 5 billion rupees (S$102 million), the Economic Times cited people with knowledge of the development as saying.

“The deal size, which is just little above par of investment made so far, reflects the current unfavourable market conditions,” one of the persons said.
           
Sembcorp, part-owned by Temasek Holdings, however, has agreed to pay premium amounts based on milestones over the next few years. “Premium payments to be paid over a period of time based on milestone achievements may match the premiums paid to power projects in India in the past,” the person added.

NCC Power Projects, promoted jointly by Hyderabad-based infrastructure firms NCC and Gayatri Projects, is building a 1,320-mw coal-fired plant in Nellore district in Andhra Pradesh with total investments of Rs 7,050 crore. NCC, which owns 55 per cent in the venture, invested Rs 460 crore out of the planned Rs 969 crore. The plant is expected to be ready by March 2015.

A senior NCC official confirmed the talks with Sembcorp and that a preliminary agreement has been signed. “Definitive agreement will be signed in a month or two. NCC did not invest the total equity amount it was supposed to for 55 per cent holding in the joint venture. Now, after the deal, Sembcorp will bring in the balance amounts,” he said.

Sembcorp did not respond queries.

The deal with NCC will be the third major investment for Sembcorp in India and its second in power sector purchase.

The project will be completed by September 2014.