Greenko Group seals sale of Mauritius business and pledges cash return

Indian clean energy producer Greenko Group has confirmed the impending sale of its Mauritius-registered operating subsidiary for £162.8m cash, to be followed by a bumper cash return to shareholders.

GIC, Singapore's sovereign wealth fund, has signed a non-binding agreement to buy 100% of the shares in Greenko Mauritius from its AIM-listed, India-based parent, subject to the approval by at least 50% of shareholders.

Greenko said once it completed the sale it expected to be able to return roughly 100p per share in total to shareholders, with an initial capital return of 98p per ordinary share, leaving the AIM company as a listed shell.

Greenko's shares closed on Friday at 80p per share, and were down at below 45p before the initial news leaked in June.

Founders Anil Kumar Chalamalasetty and Mahesh Kolli, who are the joint managing directors of the group, have agreed to enter into new service agreements with GIC's newly formed holding company and it was stated that the pair have not participated in any board vote regarding the disposal due to the potential for a conflict of interest, though their ACMK Enterprise investment vehicle holds 17% of the AIM-listed outfit.

Greenko chairman Keith Henry said: "The independent directors believe that the disposal is in the best interests of shareholders and through the realisation of certain cash proceeds will facilitate a return of capital."

When the deal was announced, broker Investec said if the deal was completed, in essence Greenko was selling its ownership interest in the underlying business and becoming a cash shell. "Subsequent distributions to Greenko equity shareholders will be net of taxes and other transaction costs."

Shares in Greenko were up 11.75% to 88.56p by 1420 BST on Monday.