Adani Power Acquires Lanco Amarkantak in Landmark Deal
The Indian power sector witnessed a significant development with the Competition Commission of India (CCI) approving the acquisition of Lanco Amarkantak Power by Adani Power, a subsidiary of the Adani Group. This move comes after Adani Power received the nod from the Committee of Creditors for its resolution plan to acquire the insolvent Lanco Amarkantak Power.
The Lanco Amarkantak acquisition signifies Adani Power's aggressive strategy to expand its power generation capacity. This deal marks the company's second acquisition under the Insolvency and Bankruptcy Code (IBC) within the current financial year, highlighting its keenness to capitalize on emerging opportunities in the Indian power market.
A government notification provides a clear picture of the acquisition. Adani Power, the acquiring entity, is a prominent player in India's thermal power generation sector, operating power plants across several states. On the other hand, Lanco Amarkantak Power, part of the Lanco Group, is undergoing CIRP under the IBC framework. The proposed deal entails the complete acquisition (100% equity share capital) of Lanco Amarkantak by Adani Power. Located in Chhattisgarh's Korba district, Lanco Amarkantak Power comprises two 300-megawatt thermal power units. These units are strategically tied up with long-term power purchase agreements with state distribution companies of Haryana and Madhya Pradesh, ensuring a steady revenue stream for Adani Power.
Interestingly, this is not the first attempt to acquire Lanco Amarkantak Power. In October 2023, the CCI approved a different set of bidders – PFC Projects, REC, SJVN, and Damodar Valley Corporation – for a 100% acquisition of the company. This prior attempt highlights the attractiveness of Lanco Amarkantak's assets and the evolving dynamics within the Indian power sector, where consolidation appears to be a growing trend. The Lanco Amarkantak acquisition comes amidst another development for Adani Power. The CCI has also approved the subscription of CCPS B (Compulsorily Convertible Preference Shares) of API Holdings, the parent company of Adani Power, by MEMG LLP and 360 ONE Group. This additional investment signifies continued confidence in Adani Power's future prospects.
Market Reaction and Looking Ahead
Despite the positive developments, Adani Power's share price experienced a slight decline at the close of the market on the day the CCI approval was announced. However, the long-term implications of the Lanco Amarkantak acquisition are expected to be positive for Adani Power. This deal strengthens the company's position as a major player in the Indian thermal power sector, providing it with a strategic advantage as the power market landscape continues to evolve.
