Reliance Infra in exclusive talks with Adani to sell Mumbai power business
Mumbai: Reliance Infrastructure Ltd has entered into exclusive negotiations with Adani Transmission Ltd for the potential sale of Reliance Infra’s power generation, transmission and distribution business for Mumbai.
In a filing to the stock exchanges on Tuesday, both firms said they had entered into a period of exclusivity till 15 January but cautioned that the proposed transaction is subject to confirmatory diligence, definitive documentation and customary approvals.
“Accordingly, there can be no certainty that a transaction will result. Further announcements will be made at an appropriate stage,” Reliance Infra told the exchanges. “Reliance Infra intends to utilise the proceeds of the proposed transaction entirely to reduce its debt and further strengthen its financial position to tap mega growth opportunities in defence and EPC (engineering, procurement, construction) for the infrastructure sector.”
Adani Transmission said that the proposed transaction will strengthen its footprint in the power transmission sector and also mark its foray into the distribution space.
While no financial details of the potential deal were shared, The Economic Times, citing people aware of the matter had reported in October that another contender for the deal, renewable energy firm Greenko, backed by Singapore’s GIC and Abu Dhabi Investment Authority, had placed a bid of Rs13,000-14,000 crore for the asset. The Mumbai business distributes power to nearly 3 million consumers, covers an area of 400 sq. km and caters to a peak demand of over 1,800MW, with revenue of Rs7,532 crore in 2016-17.
Reliance Infra has been in talks with potential buyers for the sale of the asset in the past as well but wasn’t successful. The company had entered into a similar exclusivity period for the sale of a 49% stake in the Mumbai business to Canadian pension fund PSP Investments in November 2015. The announcement comes at a time when the Anil Ambani-led Reliance Group is looking to sell assets to reduce debt.
Mint reported in October that another group company, Reliance Communications Ltd, which recently called off a planned merger of its wireless unit with Aircel Ltd, is preparing to monetize assets ranging from spectrum to real estate as it tries to repay Rs45,000 crore of debt.
The company is expecting to pare debt by as much as Rs25,000 crore, or more than half, much before December 2018, executive director Punit Garg said in an interview to Mint in October.
Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in the Bombay high court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case.