October 6, 2016 1:09:02 am
Reliance Infrastructure Ltd of the Anil Ambani group has signed a binding term sheet agreement to sell its power transmission assets to Adani group firm Adani Transmission Limited (ATL).
Though statements from RInfra and Adani did not reveal the transaction value, market estimates are that it’s in the region of over Rs 2,000 crore.
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“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 and Mumbai power businesses are in advanced stage,” RInfra said in a statement.
RInfra owns the country’s first 100 private sector transmission project — Western Region System Strengthening Scheme (WRSSS) B and C projects located in the state of Maharashtra, Gujarat, Madhya Pradesh and Karnataka. RInfra owns 74 per cent in Parbati Koldam Transmission Company Ltd (PKTCL) located in Himachal Pradesh and Punjab in joint venture with Power Grid Corporation of India Limited (PGCIL). All three transmission projects are completed and revenue generating.
The proposed transaction is subject to due diligence, definitive documentation, applicable regulatory approvals and certain other conditions. Further announcements will be made at an appropriate stage. SBI Capital Markets Limited is acting as the financial advisors to RInfra for this transaction,” it said.
The acquisition will add around 3,521 circuit kilometres of transmission lines to Adani’s assets. All assets are currently operating at an average availability of over 99.5 per cent, Adani statement said.
The firm sold its cement business to Birla Corporation in a Rs 4,800-crore deal in August. In November 2015, it had signed a non-binding term sheet to sell 49 per cent in its Mumbai power business to the Canadian Public Sector Pension Investment Board, or PSP Investments but that deal has not yet fructified.
“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,” said Gautam Adani, chairman of Adani Group.
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