Reliance Infra to sell its Mumbai power assets to Adani for $2.93 bn

Reliance Infrastructure Ltd has entered into an agreement with Adani Transmission Ltd to sell its Mumbai power business, including generation, transmission and distribution of power for the city for around Rs18,800 crore ($2.93 billion), the company said in a statement.

The transaction, which marks Adani Transmission's expansion into the power distribution sector in Mumbai, will also increase Adani group's footprint in the power transmission space.

Reliance Infrastructure's Mumbai power business is valued at Rs12,101 crore ($1.88 billion). The Mumbai power business has about 2.97 million customers and involves distribution of 1,892 megawatt of power. Its power generation and distribution business includes the 500 megawatt Dahanu thermal station and over 540 circuit km of transmission lines.

''The acquisition marks our foray in the distribution sector in India. We see a massive growth opportunity and will look at both organic and inorganic opportunities. With this acquisition, Adani Transmission will enjoy the benefit of scale and of being an integrated distribution and transmission business in India,'' said Gautam Adani, chairman of Adani Group.

Reliance Infrastructure will use the proceeds of the transaction to reduce its debt. It will focus on upcoming opportunities in engineering, procurement and construction (EPC) and defence businesses, it said.

Reliance Infrastructure had, in November 2015, signed a pact to sell a 49 per cent stake in its power business in Mumbai to Canada's Public Sector Pension Investment Board, but the deal didn't fructify.

In December last year, the firm agreed to sell its power transmission assets in the western region to Adani Transmission at an enterprise value of Rs1,000 crore ($148 million).

Reliance Infrastructure posted consolidated revenue of Rs27,036.47 crore for 2016-17. Its Mumbai power distribution business reported revenue of Rs7,532 crore.

Adani Transmission is part of the Adani group. It is the largest power transmission company in the private sector and owns and operates around 5,450 circuit km of transmission lines, according to its annual report. In 2016-17, the company posted consolidated revenues of Rs 2,901.55 crore.

SBI Capital Markets acted as financial adviser to Adani Transmission on the transaction.