GMR Infrastructure’s overseas acquisition of InterGen NV in 2008 was touted as one of the biggest Indian overseas acquisitions, specifically in the energy sector. Two years later, when InterGen’s assets form a significant part of GMR’s power assets, not much financial information about the Netherlands-based company is available in the public domain.
GMR had acquired the 50% stake in InterGen from AIG Highstar Capital II LP, a fund owned by the American International Group. Back in 2008, according to a press release issued by GMR, the transaction was valued at $1.1 billion.
In October 2008, InterGen issued a press release on its website stating that GMR Infrastructure Limited had completed its previously-announced acquisition of a 50% interest in InterGen from AIG Highstar Capital and affiliates. The balance 50% in InterGen is held by Ontario Teachers’ Pension Plan. This Canadian pension plan has held this stake in InterGen since 2005.
According to a Karvy Research note, InterGen’s total present operational capacity is around 6,254MW, of a total equity value of Rs32,226 million, thus placing GMR’s 50% stake in the power utility at a value of Rs16,113 million.
This stake in InterGen is significant considering GMR’s total operational capacity (including all its subsidiaries)—and excluding InterGen—is only around 9,087MW. The total stake value of GMR in all the assets and projects owned by it is around Rs2,68,065.40 million, including InterGen.
InterGen has 12 power plants located across the UK, the Netherlands, Mexico, Australia and the Philippines. GMR’s presence in these countries is only due to the InterGen acquisition.
Despite InterGen forming a significant asset base for the group and GMR having acquired the stake at $1.1 billion, not much information is available about the company on GMR’s website or in its annual reports.
GMR’s annual report for 2008 -09 states that the financial results of InterGen have not been considered in the consolidated results of the company pending conversions of Compulsory Convertible Debentures (CCDs).
GMR’s results for the December 2009 quarter also state that the company has given a corporate guarantee of up to a maximum of $1.38 billion to the lenders on behalf of a fellow subsidiary to enable it to raise debt for financing the InterGen acquisition.
InterGen, with its headquarters in the Netherlands, was delisted from the Singapore Stock Exchange in 2008. The ‘financial reports’ section on InterGen’s website is also locked from public view. Thus, accessing the company’s financial data is almost impossible.
According to one of the analysts tracking GMR, InterGen’s plants are operating satisfactorily, but not much data is available to state the exact operating profits of the company. An email sent to the GMR corporate communications department requesting more financial information on InterGen remained unanswered at the time of writing this article. Similarly, an email sent to InterGen was also not immediately answered.
Though InterGen’s financial information is not available in the public domain, facts and figures related to the company’s existing—and planned—capacity as well as debt can be accessed only through analyst reports.
As per the Karvy research note, InterGen has a total 8,086MW of net operational capacity (including 428MW under construction in the Netherlands). Of the 8,088MW, its net equity capacity is 6,254MW. About 70% of InterGen's capacities are sold on a long-term basis and the remaining on merchant basis.
The note further states that InterGen’s market value is around Rs1,43,546 million. The company holds debt of around Rs1,86,550 million. Given GMR’s 50% stake in Intergen, GMR’s InterGen stake is valued at Rs 71,773 million. — Amritha Pillay