India

India

Orix plans to buy out cash-strapped Indian partner

Japanese financial service firm Orix Corporation has announced it intends to buy the 51% stakes cash-strapped Infrastructure Leasing & Financial Services (IL&FS) holds in seven Indian wind farms co-owned by the two companies.

Orix and non-banking financial institution IL&FS’s wind energy unit co-own seven wind farms in India
Orix and non-banking financial institution IL&FS’s wind energy unit co-own seven wind farms in India

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Orix and non-banking financial institution IL&FS’ wind energy unit (IWEL) co-own seven wind farms in India with a combined capacity of 874MW.

The Japanese firm can buy out its Indian partner if it matches the price offered by the highest bidder for purchasing IWEL’s stake in the seven projects, under the terms of an existing agreement between the two companies.

State-owned natural gas processing and distribution company Gail Ltd had emerged as the highest bidder for the seven projects at the end of the bidding stage in April, as IL&FS sought to offload the wind farms.

It had offered around INR 48 billion ($682 million) for 100% of the portfolio’s enterprise value, assuming the projects' market value and collateral value being the same, for an aggregate of INR 37 billion, IL&FS said.

The sale of the seven wind farms to Orix is subject to compliances and approvals required under applicable laws, the infrastructure investor added.

Closure of the sale is expected by the end of June 2019, subject to legal approvals, it stated.

Investor IL&FS is selling its wind energy unit — which totals 775MW — along with many of its education, roads and water infrastructure assets as it looks to clear its debt.

It had declared bankruptcy last year amid failed loans and non-performing assets.

The Indian government took over IL&FS in October 2018 and appointed a new board of directors to oversee the company’s turnaround after racking up a debt of INR 920 billion ($12.4 billion).

IL&FS’ new board has started a sale process of its assets and expects binding financial bids by July 2019.

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