JP Hydro-JP Power merger to be likely outcome of board meet

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JP Hydro Power board will meet today to amalgamation as well as fund raising plans. Managing Editor of CNBC-TV18, Udayan Mukherjee said

the bigger idea was to merge JP Hydro and JP Power Ltd and make a bigger power conglomerate or a power giant within the group. "I would be surprise if they did not come in with an amalgamation plan. If they do not choose to do that then they will do some capital raising and that probably will be on JP Hydro's book rather than JP Power's book," he added.

Here is a verbatim transcript of Udayan Mukherjee's comments on CNBC-TV18. Also watch the accompanying video.

A couple of weeks back Manoj Gaur, of JP Associates seemed to be leaning towards a merger?

A: That is what will be taken up. I doubt whether this will be a qualified institutional placement (QIP) or a capital raising plan because they have already filed for an initial public offering (IPO). There is no reason why JP Power should not go in for an IPO given market conditions if indeed capital raising was the only idea.

I think the bigger idea probably is to merge JP Hydro and JP Power Ltd and make a bigger power conglomerate or a power giant within the group. So I would be surprise if they did not come in with an amalgamation plan. If they do not choose to do that then they will do some capital raising and that probably will be on JP Hydro's book rather than JP Power's book.

So fingers crossed but I think it will still be a very material development. If indeed it is amalgamation then the market will sit back and take stock of the kind of execution plan that they have for two entities put together for how much power generation capacity is being loaded on. And then try and ascribe some valuation to the joint entity. What it has done so far is probably just ramp up JP Hydro in the expectation that JP Hydro will be a transformed company not be restricted to the kind of power generation capacity it has currently and the plans which are not as big as JP Power. So I think it is a transformational event for JP Hydro and JP Power and also to the extent that JP Associates will own 70% of the merged entity; it is very material for JP Associates too.