NTPC to buy Avantha's Jhabua Power, its first acquisition under the IBC

NTPC Ltd., India’s largest power generating company, has acquired the stressed Jhabua thermal project (600Mw) of Gautam Thapar-owned Avantha Group, through the Insolvency and Bankruptcy Code (IBC) process.

It is the first asset that NTPC is taking over through the National Company Law Tribunal (NCLT) route. The estimated deal size is Rs 1,830 crore. The balance 50 per cent stake in the thermal unit would be owned by the lenders. Jhabua was submitted to the NCLT in May 2019 after defauting Rs 35 crore to an operational creditor. Sources in NTPC confirmed the acquisition.

Alvarez & Marsal completed the corporate insolvency resolution process (CIRP) Jhabua Power Limited. “This was a marquee transaction on many fronts including it being the first acquisition by NTPC using the IBC and that lenders will own 50% of Jhabua Power's equity going forward. We could deliver a significant turnaround in the performance of this 600 MW coal-fired power plant during the CIRP period with EBITDA increasing 2.5X,” said Venkataraman Renganathan, managing director, Alvarez & Marsal India, who ran the CIRP.

The National Company Law Appellate Tribunal (NCLAT) in July this year upheld NTPC’s eligibility to submit a resolution plan for Jhabua. This was in response to a one-time settlement offer made by Avantha, which the NCLT did not find "commercially viable".