Global energy company PowerGen UK has sought the approval of the Foreign Investment Promotion Board (FIPB) to acquire a 12 per cent stake in the 655 MW Gujarat PowerGen Energy Corporation (GPEC) Last month the companies had entered into an agreement for the sale at a price of Rs 2880 million, according to company sources in New Delhi. The acquisition is aimed at helping the UK company establish a direct presence in the Indian market.

As part of a complex web of restructuring deals, PowerGen’s Mauritius-based joint venture, CLP PowerGen India Ltd (CLPPIL), will buy out PowerGen Holdings’ entire business interests and assets in India. PowerGen Holdings is a wholly-owned subsidiary of PowerGen UK. Gujarat PowerGen has an equity capital of Rs 7280 million. The Gujarat government holds a 12 per cent equity stake in the company through Gujarat Power Corporation Ltd. The remaining 88 per cent is held by two wholly-owned subsidiaries of PowerGen, namely, PowerGen Holdings BV (52 per cent) and PowerGen India Private Ltd with 36 per cent.

While the parent company is acquiring the state government’s stake, the Mauritius-based joint venture company will buy out the 52 per cent stake held by PowerGen Holdings in Gujarat PowerGen.

As part of its plan to route a major portion of its investments in India through Mauritius, PowerGen UK had set up a special purpose joint venture company with another international power major, namely, CLP Power International Ltd, in Mauritius. Simultaneously, plans have also been slated for the takeover of PowerGen India by CLP PowerGen.