DLF sells Gujarat wind power project to BLP for Rs 282 crore

DLF took yet another step forward in divesting its non-core assets. The real estate major is selling a large part of its wind energy business to a clean energy start-up Bharat Light & Power (BLP). Its wind energy division can generate up to 227 megawatts of wind energy through installations in 4 Indian states. Revenue from wind energy generation in 2011-12 was Rs 107.6 crore compared to total revenue of Rs 3,447 crore in its standalone financials.

It is selling its wind energy capacity in Kutch, with a 150mw capacity, for Rs 282.3 crore, to BLP Vayu (Project 1), a subsidiary of BLP. This is a slump sale transaction, that is all the assets and liabilities will be pooled together and sold, with no separate value attributed to each item. This means that the loans that DLF had taken for building these assets will also be transferred to BLP. So, the deal valuation will be the cash consideration or Rs 282.3 crore plus the debt that gets transferred.

The Kutch project was the first wind energy project by DLF. It was set up with an initial project cost of Rs 883 crore, with a loan component of 70%, according to the project design document filed with the United Nations Framework Convention on Climate Change (UNFCC) for claiming carbon credits.

The UNFCC document also states that its term loan tenure was 7 years with a 1-year moratorium and an interest rate of 10.25%. Therefore, the residual loans on this front will also get transferred to BLP.

This divestment should see it move closer to its objective of bringing its debt levels down to Rs 18,500 crore by the end of March 2013, compared to the end-September 2012 level of Rs 23,200 crore. The sale of NTC Mumbai land and Aman Resorts are already done, and the wind energy divestment too has been partially concluded. Investors seem to like the news, as DLF ended up with a gain of 1.9% on Thursday, January 31.

Bharat Light & Power is a relatively new player in the field of clean energy, and has been founded by a former General Electric executive Tejpreet Singh Chopra. He is a former president and CEO of General Electric in India, Sri Lanka and Bangladesh. Ventureast lists BLP as one of its investee companies; it is a venture capital fund with about $300million under management.

UPDATE: On 8 July 2013, DLF announced to the stock exchange the completion of this deal, and said that it has got a lump-sum consideration of Rs 325.88 crore. Here’s the statement announced on the Bombay Stock Exchange: "In terms of the definitive Business Transfer Agreement executed on January 31, 2013, between the Company and BLP Vayu (Project 1) Private Ltd., a subsidiary of Bharat Light & Power Pvt. Ltd. to transfer the Company’s undertaking comprising of 150MW capacity wind turbines situated at Kutch, Gujarat, subject to certain regulatory approvals and permissions, the Company has yesterday (05.07.2013) transferred the said undertaking including related assets and liabilities along with relevant long term loans on ‘as is where is basis’ by way of slump-sale for a lump sum consideration of Rs. 325.38 crores. The transactions are in line with the DLF’s objective of divesting its non core assets."

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