(Adds background on Jaiprakash Power)
ABU DHABI/NEW DELHI, March 2 (Reuters) - A consortium led by Abu Dhabi National Energy Co (TAQA) has agreed to buy two Indian hydroelectric power plants from Jaiprakash Power Ventures in a deal worth about $1.6 billion, TAQA said on Sunday.
The group will spend $616 million on equity in the plants, and in addition take over their non-recourse project debt, bringing the total enterprise value to around $1.6 billion, a TAQA spokesman told Reuters.
State-run TAQA, with 51 percent of the consortium, will control the operations and management of both plants under the deal. PSP Investments, one of Canada's largest institutional investors, will own 39 percent and an infrastructure fund run by India's IDFC Alternatives will hold 10 percent.
The two plants, located close to each other in the northern state of Himachal Pradesh, have a combined generating capacity of 1,391 megawatts, and are near another Indian hydroelectric plant in which TAQA acquired a stake last year.
Along with a lignite power plant owned by TAQA, the latest deal will bring TAQA's combined generating capacity in India to 1,741 MW. The deal, which needs regulatory and third-party approvals, is expected to close in 2014, TAQA said.
Shares in Jaiprakash Power jumped 12 percent on Friday in anticipation of the deal; Reuters reported early last month that it was close to being signed. On Friday, the Indian company said its board would meet on Saturday to consider recommendations for cutting debt and boosting shareholder value.
Like many power and infrastructure companies in India, Jaiprakash Power and its parent Jaiprakash Associates have suffered from large debts and weakness in the Indian economy over recent months.
Including subsidiaries, Jaiprakash Associates had total debts of 550 billion to 560 billion rupees ($8.9-9.0 billion) in September, which it planned to cut by 150 billion rupees through sales of assets including cement and power plants during the current fiscal year through March.
Jaiprakash Power reported a widening of its net loss to 1.53 billion rupees in the three months to December, while its shares are down about 40 percent in the past 12 months.
Jaiprakash Associates last year sold its cement plant in Gujarat state to UltraTech Cement for around $594 million including debt. (Reporting by Stanley Carvalho in Abu Dhabi and Tommy Wilkes in New Delhi; Writing by Andrew Torchia)