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DELHI-BASED Jaypee group has decided to merge privately held Jaiprakash Power Ventures (JPVL) with the public listed Jaiprakash Hydro Power (JPHL) with effect from April 01, 2009 and raise Rs 1,500 crore through fresh issue of shares to finance its projects, JPHL said in a filing to the Bombay Stock Exchange.

   The boards of JPVL and JPHL have approved the proposed merger, which brings Jaypee group’s entire power business worth 13,470 mw under one umbrella. Shareholders of JPVL will get three equity shares of JPHL for each equity share held in JPVL.

   On the last traded price of Rs 92.40 for JPHL shares on BSE, the merged entity will have a valuation of Rs 19,364 crore, with JPVL alone being valued at Rs 14,800 crore.

   SBI and ICICI had together picked up 3% stake in JPVL for Rs 400 crore in January 2008, following which the company was supposed to go for an IPO to raise more than Rs 3,000 crore. But with global economic crisis leading to a stock market meltdown, JPVL deferred its IPO plans and now has merged it with the listed group company. The merger will help unlock the value of Jaypee group’s power assets, strengthen the balance sheet of power firm, which can help it bid for more projects, and most importantly allow JPVL to tap capital market through QIP route.

   The merged entity expects to raise up to Rs 1,500 crore through fresh issue of shares which could take various forms, including through qualified institutional placements (QIP), follow-on public offer and FCCB. Recently, realty firm Unitech, Indiabulls Real Estate, PTC and sugar firm Bajaj Hindustan have successfully raised funds through QIPs. JPHL at present has only one operational power unit—300 mw Baspa-II—besides a 51% equity in a joint venture with Power Grid Corporation for a power transmission project.

   Sister company JPVL has one operational hydropower plant at Vishnuprayag with a capacity of 400 mw and has total of 12,770 mw of power projects, including 7,850 mw thermal power projects, under execution. In the next three years, JPVL would have additional 2,800 mw of operational power plants, including 1,800 mw of thermal power. Jaypee group had early this year merged its four subsidiaries engaged in cement, real estate, construction and hospitality businesses with its flagship listed firm Jaiprakash Associates.

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