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Samayanallur Power Investment Private Ltd (SPIPL)

M&A Advisory (Leveraged Buy-out) and Debt Syndication

2016

Details of the Transaction (Including unique traits, if any)

  • The final transaction structure was conceptualized to consist of three stages: Buy-back of Shares by MPCPL to the extent permissible, Acquisition of remaining shares by SPIPPL and Merger of SPIPPL in MPCPL.
  • The agreed valuation for the transaction was USD 33.5 Mn for acquiring Covanta’s stake in MPCPL and CMOPL and SBICAPS syndicated Rs. 77 Cr facility from SBI and L&T Finance for the transaction in line with extant norms of RBI.
  • First of its kind Leveraged Buy-out (LBO) by SBI/SBICAPS for a private limited company with funding in a shell company (SPIPPL) by a domestic nationalized bank for the purpose of acquisition of shares.

 

SBICAPS role

Advisory to Samayanallur Power Investment Pvt Ltd (SPIPL) for acquisition of Madurai Power Corporation Pvt Ltd (MPCPL) running 106 MW diesel powered IPP in Madurai TN, operated by Covanta Madurai Operating Private Limited (CMOPL) through a new SPV named SPI Power Pvt Ltd (SPIPPL). CMOPL was 76.64% owned by Covanta Energy India (Balaji) Limited (CEIBL) while the balance was owned by SPIPL (23.36% stake).

 

Key Learning

  • Detailed understanding of guidelines/regulatory issues/approvals etc related with the M&A transaction especially when an Indian promoter buys out foreign equity investor. 
  • Raised funds from banking sector for domestic share acquisition funding in infrastructure sector.
  • Transaction happened in multiple stages (buy-back, acquisition and merger) with a very specific security structure at each stage hence drafting of loan documents provided lots of key learning. 
  • Complying with existing contractual obligation of MPCPL (PPA, FSA, and Land lease from TNEB etc.)
  • Understanding of tax regulations with regard to a cross-border M&A transaction

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