Energy

Huaneng buys into InterGen

By Ruth David (China Daily)
Updated: 2010-11-30 10:58

China Huaneng Group will pay $1.23 billion for a 50 percent stake in Massachusetts-based power utility InterGen in its biggest overseas acquisition in more than two years. [Photo / China Daily]

China's largest power producer makes biggest acquisition for two years

MUMBAI, India - China Huaneng Group, the nation's largest electricity producer, will pay $1.23 billion for a 50 percent stake in Massachusetts-based power utility InterGen in its biggest overseas acquisition in more than two years.

The Chinese power producer will buy GMR Group's entire stake in the utility in a deal expected to close in the first half of 2011, the Indian company, whose assets range from airports to highways, said in a statement.

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China Huaneng will gain access to 12 power plants in the United Kingdom, Mexico, the Netherlands, Australia and the Philippines, building on its $3.1 billion acquisition of Singapore's Tuas Power Ltd in March 2008. The InterGen stake sale will raise $225 million that can be used to fund GMR's projects, said G.M. Rao, chairman of the Bangalore-based group.

"GMR was talking about $1.5 billion at one point, so the current value is also clearly positive for Huaneng," said Michael Parker, senior analyst at Sanford C. Bernstein & Co.

China Huaneng is also selling shares in a unit, Huaneng Renewables Corp, on the Hong Kong Exchange next month to expand output capacity and meet rising domestic demand.

GMR bought its share of InterGen for $1.1 billion in October 2008 from a fund owned by American International Group Inc. The rest of the power utility is owned by the Ontario Teachers' Pension Plan.

The decision to sell "is in line with the strategy to focus more on the Indian market where GMR is already a market leader," Rao said, adding that InterGen's overseas holding company has $1 billion in debt.

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