JSW Energy Ltd, the energy arm of diversified JSW Group, has pipped rival suitors to acquire Canada's CIC Energy Corp. for $414 million (Canada $422 million). The deal involves JSW picking up a 100% stake in the coal mining and power firm which owns 2.6 billion tonnes of coal reserves in the Mmamabula region of Botswana.
The deal would help JSW get supplies for its upcoming projects, where it is targeting an aggregate generation capacity of 12,070 MW by 2015-16. This is the third acquisition by JSW Energy, part of the $5 billion group led by Sajjan Jindal, to secure supply of coal this year. The share price of the firm reacted positively to the deal, rising by nearly 3% to Rs 114.4 in the morning trade before coming down to Rs 111 levels.
The deal represents a 159% premium to the closing price of CIC on September 14, a day prior to the announcement of the first acquisition proposal. GMR Group and a Chinese firm were also reportedly in race for CIC. The deal between JSW and CIC is expected to close by the end of fiscal year FY11.
“CIC has approximately 2.6 billion tonnes of coal reserves in the Mmamabula region which are NI 43-101 compliant. The reserves have good quality thermal coal with low sulphur content that is adequate to meet all the project requirements of JSW Energy,” said Sajjan Jindal, Chairman, JSW Energy.
“The reserves can be exploited with an exportable surplus of up to 20 million tonnes per annum over the next 40 years. The reserves can also meet the requirement to set up power plants in Botswana with a capacity of up to 2,000 MW,” said N.K. Jain, Vice-Chairman, JSW Energy.
JSW Energy has an operational capacity of 1,430 MW with another 1,710 MW of generating capacity is in an advanced stage of completion. The firm acquired a 70% stake in Indian Ocean Mining (P), which has coal prospecting rights in North West region of South Africa, in June this year. It also acquired a stake in South African Coal Mining Holdings Ltd.