DB Power Buys Back Global Infrastructure’s Stake At ₹400 Crore

Adani Power canceled its agreement to buy DB Power, citing its long-stop agreement date. But DB Power acquired Global Infrastructure’s stakes at ₹400 Crore.

According to two people with knowledge of the transaction, Global Infrastructure Partners (GIP) was able to exit the investment by having its stake in DB Power Ltd.’s thermal power business repurchased for 400 crores by the Dainik Bhaskar Group. 

The individuals cited above, who asked to remain anonymous, claimed that the buyback was paid for by internal accruals at the company. GIP desired to go out. That is the reason the purchase was made, according to one of the aforementioned sources. 

For roughly 500 crores, IDFC Private Equity purchased a 16.13 percent stake in DB Power in January 2015. IDFC PE sold its infrastructure holdings to GIP in April 2018. 

After Adani Power canceled its deal to purchase DB Power, the deal was announced about a month later. Adani simply stated that the long-stop agreement date had passed without providing a justification for the deal’s cancellation. 

In August 2022, Adani and DB Power will complete a 7,017 crore debt and equity purchase. 

Suresh Nagarajan, the chief executive of DB Power, declined to comment. A request for comment on Wednesday night from GIP executives did not receive a prompt response. 

In FY22, DB Power reported an operating income of 3,377 crores, compared to 2,823 crore the year before. In FY22, it reported a profit of 591 crores, and in FY21, it had a profit of 312 crores. 

On the strength of consistent operational performance, the business risk profile should remain healthy over the medium term.

 According to a Crisil Ratings report from February, the financial risk profile is supported by liquidity in the form of a DSRA (debt service reserve account) and undrawn bank lines amid steady realizations. 

The long-term rating for DB Power Ltd. (DBPL) has been raised by Crisil from “A” to “AA-.”. 

Following the announcement of Adani Power’s acquisition, Crisil Ratings stated that it had “put on watch” DB Power. It stated that after the deal was scrapped, the rating watch had been resolved. 

According to Crisil, the rating upgrade “considers an improvement in DB Power’s financial risk profile, driven by the maintenance of strong operating performance, further prepayment of debt, and enhancement of liquidity. It also illustrates the anticipated maintenance of a favorable business risk profile. “. 

Operating performance was strong during the nine months ending in December 2022, fueled by higher power demand and strong sales in the short-term market. 

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Ebitda was 1,091 crores instead of 1,504 crores. Because of the steady, healthy demand for power and the low cost of generation, operating performance is anticipated to remain stable over the medium term, according to a Crisil report released on February 21.