Tata Power may sell 10% Bumi stake to Olympus

Mumbai: Tata Power, the country’s biggest power generator in the private sector, might sell 8-10% of its stake in two coal mines in Indonesia for $300 million.
The stake could be sold to Olympus Capital, a private capital firm, a television channel reported on Monday.

Tata Power could not be reached for comment but it is said to have denied the move. Officials at Olympus Capital India were not available for a comment.
An email sent to the investment firm’s administrative manager by DNA Money did not elicit a response at the time of going to print.

Jagannadham Thunuguntla, equity head, SMC Capitals Ltd, which provides merchant banking and research services, said he didn’t have direct knowledge of this deal. He, however, added that Olympus Capital is among the handful of investment firms capable of making a big-ticket investment all by itself. “Most of the big ticket deals announced so far have been co-investments and Olympus has the financial power to pursue large private equity investments,” said Thunuguntla. Turn to Page 20
Speculations have been rife for some time over Tata Power’s plans to sell its stake in the mines, but the company has maintained that there is no such thing on the cards.

Tata Power in 2007 acquired a 30% stake in two coal mines and a coal trading company, all promoted by PT Bumi Resources Tbk, in Indonesia for $1.1 billion.
An analyst with a domestic brokerage said the reasons for the move could be various. “They might want to buy stakes in more mines or they need funds for equity infusion in their power projects,” he stated, not wishing to be identified.
He added that there was no reason for Tata Power to be tied to these mines. “The sale won’t affect the contract for sourcing coal from there for its projects,” he said.

Tata Power has an installed capacity of under 3,000 mw, which it plans to up to 25,000 mw by 2017 at a cost of Rs 29,300 crore.
The current annual mining capacity at the Indonesia mines is 60 million tonnes and Tata Power imports 1 mt from there for its plant at Trombay. The company also plans to source the total coal requirement of 12 mt of its 4,000 mw ultra mega power project in Mundra from the PT Bumi mines.

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