Search the Internet          Tips  Sites: Finance, Investment

Rothschild may win DPC financial advisor's job

S Ravindran & Sangita Shah

The UK-based investment bank N M Rothschild has emerged as the front-runner for bagging the financial advisor's mandate for the sale of the beleaguered Dabhol Power Company.

The lenders to the power company, led by the Industrial Development Bank of India, which are trying to find a buyer, are in advanced discussions with Rothschild.

"The two sides are now discussing the terms of an engagement letter. The formal deal is likely to be inked in around a fortnight," said sources in the lenders' consortium.

The other investment banks and consultants who were in the race for the mandate were DSP Merrill Lynch, PriceWaterhouseCoopers and Salomon Smith Barney.

"We have zeroed in on Rothschild as it has previous experience in the Indian power sector. They also have a good grip on the issues related to the Dabhol power project," sources said.

The global and domestic lenders had decided after a marathon meeting in Mumbai last month to appoint a financial advisor for charting out a roadmap for the sale of DPC.

The advisor will have to also recommend whether it will be an asset sale or an equity sale. They also set up a committee of lenders comprising IDBI, ICICI, State Bank of India, Overseas Private Investment Corporation, Bank of America and ABN-Amro to select an advisor.

Although IDBI executive director A K Doda had announced last month the decision to select a financial advisor, it is learnt that the process had in fact been kicked off earlier.

The lenders have practically decided on an asset sale as the earlier preferred option of an equity sale has been practically abandoned due to Enron Mauritius, the holding company of the erstwhile energy major Enron group, filing for Chapter 11 bankruptcy in the US.

This means that its Indian subsidiary, DPC, could be dragged into these proceedings. However, as the lenders have a first charge on the assets of DPC, such a sale cannot be a part of the bankruptcy proceedings.

The three US-based power majors have decided to exit the $3 billion, 2,184 mw, power project in Ratnagiri district, Maharashtra, following a payment dispute with MSEB.

Powered by

ALSO READ:
The Enron Saga
The Rediff Budget Special
The Rediff-Business Standard Special
Money