Adani Transmission Ltd has signed a binding term sheet to acquire Reliance Infrastructure Ltd’s (R-Infra) stake in three power transmission projects, which would strengthen its position as a top private player in the business.
The firms said on Wednesday that the deal would involve three operating assets operating in India: 100% stake of Western Region Strengthening System Scheme B (WRSSS B) that has capacity of around 2089 ckt kms; 100% stake of Western Region Strengthening System Scheme C (WRSSS C) that has around 974 ckt kms and 74% stake in Parbati Koldam Transmission Co Ltd that has around 458 ckt kms capacity.
Parbati Koldam is a 74:26 joint venture between R-Infra and state controlled Power Grid Corporation of India Ltd.
The three projects were commissioned between January 2014 and December 2015 and all the assets are operating at an average availability of more than 99.50%, the firms said.
The companies did not disclose the deal value but separate media reports citing unnamed people said the transaction is worth around Rs 2,000 crore.
The acquisition is expected to be completed in current financial year and subject to due diligence, definitive documentation, applicable regulatory approvals and certain other conditions.
The move will boost Adani Transmission’s capacity by close to 50%.
It is already the largest power transmission company operating in the private sector in India and owns, operates and maintains around 5,000 kms of transmission lines.
It has four operational transmission systems that serve the northern and western regions of India and is also constructing additional projects of around 1,900 kms in Rajasthan, Chhattisgarh, Madhya Pradesh, Maharashtra, Jharkhand and Bihar.
With completion of all on-going projects and the previously announced acquisition of some assets from GMR, the network is expected to increase to 7,300 kms.
With the latest deal, its network will move to around 10,800 kms.
Gautam Adani, chairman of Adani Group, said, “With this acquisition, ATL will enjoy substantial benefit of scale driving and is in sync with the deep-rooted strategy of ATL to enhance the value for the stakeholders through both organic as well as inorganic growth.”
R-Infra said the entire sale proceeds shall be utilised for debt reduction.
“The transaction is in line with the strategic plan of monetising non-core business and focus on major growth areas like defence and EPC business. Monetisation of cement business has been completed and monetisation of roads & Mumbai power businesses are in advanced stage,” it said.
SBI Capital Markets is acting as the financial advisors to R-Infra for this transaction.
Last November, R- Infra had signed a non-binding term sheet with Canadian pension fund manager Public Sector Pension Investment Board (PSP Investments) to sell 49% equity stake in its power business in Mumbai and adjoining areas.
R-Infra also indicated that it is looking to sell stake in its road projects and signed a deal to sell its cement business as the firm retunes its focus on its defence sector business.
Last year, Reliance Infra had pipped several other business groups, including Munjals of Hero and Mahindras, to ink a deal with Nikhil Gandhi-promoted SKIL to buy management control of Pipavav Defence & Offshore Engineering Co. Ltd.
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