Anil Ambani-controlled Reliance Infrastructure has said that it will sell its integrated power operations in Mumbai to Adani Transmission Ltd (ATL). The estimated value of the deal has been pegged at Rs 18,800 crore.
A definitive binding agreement was signed on Thursday between the two firms for a 100 per cent stake sale of RInfra’s Mumbai power business which includes generation, transmission and distribution of power in the city and suburbs. The transaction is now subject to customary approval from the regulatory authority, according to a release from Reliance Infrastructure. The deal value estimate comprises the business value of Rs 12,101 crore, regulatory assets approved so far of Rs 1,150 crore. This apart, regulatory assets under approval estimated at Rs 5,000 crore and networking capital on closing estimated at Rs 550 crore will flow directly to RInfra, the company release
RInfra will utilise the proceeds from the deal “entirely to reduce its debt, becoming debt-free and up to Rs 3,000 crore cash surplus”, it said, adding that this is the “largest-ever debt reducing exercise by any corporate and this monetisation is a major step in RInfra’s deleveraging strategy for future
Rinfra’s Mumbai power business, known as Reliance Energy, is India’s largest private sector integrated power utility distributing power to nearly three million residential, industrial and commercial consumers in the suburbs of Mumbai, covering an area of 400 sq km. It caters to a peak demand of over 1,800 MW, with annual revenues of Rs 7,500 crore.
According to an RInfra spokesperson, the standalone debt of the company is pegged at Rs 15,000 crore and the deal could eventually help the debt-ridden group become surplus. No timeline was specified for the materialisation of the deal. The firm is developing projects in sectors such as power, roads and metro rail in the infrastructure space and the defence sector. It is also a utility company having presence in generation, transmission and distribution of power and is also involved in power trading.