Adani Power Ltd (APL) and Dickey Alternative Investment Trust (DAIT) have received the approval from the Competition Commission of India (CCI) to acquire 100% shareholding of Coastal Energen Pvt Ltd (CEPL), a Tamil Nadu-based thermal power producer . The deal is expected to enhance Adani’s position as the leading private-sector thermal power producer in India.
Adani Power expansion plans
CEPL owns and operates an imported coal based thermal power plant at Tuticorin in Tamil Nadu with a capacity of 1200 MW. The company is undergoing a Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC) 2016 since December 2019. APL and DAIT had submitted a joint resolution plan to acquire CEPL in July 2020, which was approved by the National Company Law Tribunal (NCLT) in October 2020. The proposed transaction involves the acquisition of 100% equity share capital of CEPL by the acquirers for a total consideration of Rs 7,017 crore.
Benefits of the deal for Adani
The acquisition of CEPL will add 1200 MW to Adani’s thermal power portfolio, which currently stands at 12,410 MW across six states in India. The deal will also help Adani diversify its geographical presence and tap into the power demand in Tamil Nadu, which is one of the largest power consuming states in India. Moreover, the deal will enable Adani to leverage CEPL’s existing infrastructure, coal linkages and power purchase agreements to optimize its operational efficiency and profitability.
CCI’s approval and conditions
The CCI, which is the fair trade regulator in India, has approved the proposed combination involving acquisition of CEPL by APL and DAIT on February 13, 2024. The CCI said that the deal is not likely to have any appreciable adverse effect on competition in India. The CCI also noted that APL and CEPL are not close competitors in the relevant market of supply of electricity to distribution licensees in Tamil Nadu. The CCI approval is one of the conditions precedent for the completion of the deal, which is expected to be closed by March 31, 2024.
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