Dainik Bhaskar Group’s DB Power Ltd has repurchased Global Infrastructure Partners (GIP) stake in its thermal power business for ₹400 crore, in a deal that has facilitated the investor’s exit, two people with knowledge of the deal said.
The buyback was funded through the company’s internal accruals, the people cited above said, requesting anonymity. “GIP wanted to exit. That’s why the purchase was undertaken,” one of the people cited above said.
In January 2015, IDFC Private Equity acquired a 16.13% stake in DB Power for approximately ₹500 crore. In April 2018, IDFC PE sold its infrastructure portfolio to GIP.
The deal comes about a month after Adani Power cancelled its agreement to buy DB Power. Adani did not cite a reason for calling off the deal, just noting that its long-stop agreement date had expired.
Adani agreed to buy DB Power for ₹7,017 crore in August 2022 in a mixture of equity and debt.
DB Power chief executive Suresh Nagarajan declined to comment. GIP executives did not immediately respond to a request for comment on Wednesday night.
DB Power reported an operating income of ₹3,377 crore in FY22, and ₹2,823 crore in the previous year. It reported a profit of ₹591 crore in FY22 and ₹312 crore in FY21.
“The business risk profile should remain healthy over the medium term on the back of steady operational performance. Liquidity in the form of a DSRA (debt service reserve account)” and undrawn bank lines amid steady realizations support the financial risk profile,” a Crisil Ratings report in February said.
Crisil has upgraded DB Power Ltd’s (DBPL) long-term rating from “A+” to “AA-“.
Crisil Ratings said that it had placed DB Power “on watch” following the acquisition announcement by Adani Power. It said that the rating watch had been resolved after the deal was called off.
Crisil said that the rating upgrade “factors in the improvement in the financial risk profile of DB Power, driven by the sustenance of strong operating performance, further prepayment of debt and enhancement of liquidity. It also reflects the expected sustaining of healthy business risk profile.”
“Operating performance was strong during the nine months through December 2022, and high cash accrual was driven by greater-than-expected power demand and healthy sales in the short-term market. Earnings before interest, tax, depreciation and amortization (Ebitda) was ₹1,091 crore during this period against ₹1,504 crore during fiscal 2022. Operating performance is expected to sustain over the medium-term owing to steady, healthy power demand and low cost of generation,” the 21 February Crisil report added.
