Gautam Adani, the chairman of the billionaire industrial conglomerate Adani Group, would pay more than Rs 7,000 crore to acquire DB Power. After SB Energy India, this would be his second-largest M&A in the electricity sector (for which some Rs 26,000 crore was shelled out last year).
In Janjgir Champa, Chhattisgarh, DB’s 1,200 MW coal-fired power plant is being acquired by Adani.
Gautam Adani and DB
As per the power arm of the Adani Group, DB has power purchase agreements for 923. 5 MW of its capacity, which are supported by fuel supply arrangements with Coal India. Adani’s thermal power activities in Chhattisgarh will increase as a result of the agreement, which needs to be approved by the government’s antitrust office as well as other regulators and interested parties.
For Rs 3,530 crore, Adani Power purchased the 1,370MW Chhattisgarh plant owned by GMR Group in 2019. It also purchased the 600MW unit from Avantha Group in Chhattisgarh in the same year.
With a combined operating capacity of more than 12,450 MW, the DB agreement will further bolster Adani’s position as India’s largest private sector thermal power producer and provide it a strong foothold in the nation’s major power generating and consumption belts.
DB Power Ltd
In fiscal 2022, DB, which was founded on October 12, 2006, had a profit of Rs. 580 crores on a revenue of Rs. 3,488 crores. Diligent Power, a division of the Dainik Bhaskar Group, owns the majority of it (approximately 84%); Global Infrastructure Partners, a private equity firm that focuses on infrastructure, owns the remaining (16%).
The promoters of DB Power had previously discussed selling the Chhattisgarh unit with Resurgent Power, a fund supported by Tata Power, Canada’s CDPQ, and other well-known figures, but no agreement was reached. In a regulatory filing, Adani Power stated, that the agreement’s initial term (for DB) is up to October of this year, although it may be mutually extended.
Based on a Crisil study from June 2022 on DB Power, payback of debt and an improvement in the liquidity position are just two of the many variables that have contributed to the company’s business performance and financial risk profiles improving dramatically.