Anil Ambani-owned Reliance Infrastructure Ltd (RInfra) has proposed to sell 49 per cent equity stake in its integrated power business in Mumbai and adjoining areas to Canada’s Public Sector Pension Investment Board (PSP Investments).
The specified business will be carved out on a going concern basis into a separate SPV, which will be called Reliance Energy, in which RInfra will own the controlling 51 per cent stake, and PSP Investments will own 49 per cent.
RInfra will utilise proceeds of stake sale to reduce debt. As part of the deal, generation, distribution and transmission assets of Mumbai will become part of the new SPV.
However, the company didn’t disclose the financial details of the deal.
RInfra’s Mumbai Power business (known as Reliance Energy) distributes power to nearly 3 million residential, industrial and commercial consumers in the suburbs of Mumbai, covering an area of 400 sq km, and catering to a peak demand of over 1,800 MW, with revenues of Rs 7,700 crore in 2014-15. The parties have entered into an exclusivity agreement valid till March 31, 2016.
The proposed transaction is subject to due diligence, definitive documentation, applicable regulatory and other approvals and certain other conditions. Accordingly, there can be no certainty that a transaction will result. Further announcements will be made at an appropriate stage, the company said.
PSP Investments is one of the largest pension fund managers in Canada with Canadian dollar 112 billion of net assets under management as of March 31, 2015.
RInfra is engaged in developing projects through various Special Purpose Vehicles (SPVs) in several high growth sectors within the infrastructure space such as power, roads, metro rail, cement and defence. It is also a leading utility company having presence across the value chain of power businesses including generation, transmission, distribution and power trading.