In a market where acquisition is trending, Adani Power bought a Chhattisgarh-based DB power for Rs 7,017 crore or $ 879 million. This was one to expand operations and will help Adani Group to provide feasible thermal power in Chhattisgarh.
With the completion of a good Quarter where the Adani Power stock touched a fresh 52-week high of Rs 419 with a market capitalization of 13 digits which is Rs 1, 58,983 crores.
Now let’s look at what made Adani spend so much on a company many of us haven’t heard of.
Reasons for Adani to Aquire DB Power
DB power owns and operates a 2 X 600 MW thermal power plant in Chhattisgarh in the district of Janjgir Champa. They are the only known players in the thermal power market of Chhattisgarh.
In addition to this DB, Power is an asset because they have a long and medium-term Power Purchase Agreement for 923.5 MW of the capacity which is supported by Fuel Supply Agreements with Coal India. They also have been operating profitably in the last few years.
The turnover of DB Power for the last 3 FY was Rs 3,488 for FY 2021-22, Rs 2930 crore for FY 2020-21, and Rs 3,126 crore for FY 2019-20.
How did the acquisition take place?
According to the MOU, Adani Power will have 100% of the total issued, subscribed, and paid-up equity and preference share capital of DPPL.
DPPL is Diligent Power which is the holding company of DB power. DDPL will hold 100% of DB Power on the closing date of the transaction.
Adani Power has also informed the concerned security board about the takeover and how it doesn’t affect any other trading processes to ensure a smooth transition.
Now let’s see what a holding company is. It is a type of financial organization that has a controlling interest in many companies often called subsidiaries.
Adani Power aims at establishing a monopoly in the thermal power sector and with the east in its control, its ambitions look like a dream shaping its vision into a reality.
Source: Thehindu.com, and Business-standard.com