In July this year, DLF obtained an approval from its shareholders to sell the company’s wind energy business. Shareholders approved the resolution through a postal ballot. On 18 June, the company had sought shareholders’ approval for the purpose through a postal ballot.
DLF has said that it is confident of divesting its stake in the wind business in by the end of this financial year. However this is not the first time that DLF has come close to finalizing the sale of its wind assets.
We had reported earlier that DLF was seeking shareholder approval to sell 161.2MW wind farms in Gujarat and Karnataka and the sale price was likely to be around Rs 9 billion. Edelweiss had put up an enterprise value (market capitalization + debt) of Rs 780 crore for DLF’s power asset, which is 8 times EBIDTA (earnings before depreciation interest and tax) of Rs 91.1 crore that it is likely to achieve in FY14, two years from now. In other words if an investor puts in Rs 780 crore today, it will take him 10 years to reach operational breakeven, in a sector which has lost all its charm.
Earlier this year there were indications that the four likely suitors for the wind assets included Green Infra Ltd, a company promoted by IDFC Private Equity Co. Ltd; Sumant Sinha’s ReNew Power Ventures Pvt. Ltd, Swraj Paul’s Caparo Group; and Orient Green Power Co. Ltd.
As early as May 2010, we had noted that, DLF had created a separate subsidiary called DLF Wind Power for its wind energy business as a precursor to sell its wind assets and had been placed in the market some time in March-April 2010.