RInfra to sell its power transmission assets to Adanis

The Anil Ambani-led Reliance Infrastructure Ltd has signed an agreement to sell its power transmission assets to the Adani Group for over Rs2,000 crore.

RInfra owns two electricity transmission lines spanning Maharashtra, Gujarat, Madhya Pradesh and Karnataka and has a 74 per cent stake in another in Himachal Pradesh and Punjab.

"Reliance Infrastructure Ltd (RInfra) today announced the signing of a binding term sheet with Adani Transmission Ltd (ATL) for 100 per cent stake sale of its transmission assets," the company said in a statement on Wednesday.

Adani Transmission Ltd on Wednesday said tyhe acquisition amounted to a big leap in its transmission network which would double to over 10,000 ckt kms on completion of acquisition of Reliance Infra's operational transmission assets

While the two companies did not give valuation of the deal, banking sources said the sale consideration was in excess of Rs 2,000 crore.

RInfra owns the country's first 100-per cent private sector transmission project - Western Region System Strengthening Scheme (WRSSS) - B & C projects located in the state of Maharashtra, Gujarat, Madhya Pradesh and Karnataka.

It also owns a 74-per cent in Parbati Koldam Transmission Company Ltd (PKTCL) located in Himachal Pradesh and Punjab in a joint venture with Power Grid Corporation of India Ltd (PGCIL).

All three transmission projects are completed and revenue generating.

Adani Transmission Ltd. already the largest power transmission company operating in the private sector in India, owns, operate and maintains around 5,000 ckt kms of transmission lines ranging from 400 KV to 765 KV, with a total transformation capacity of more than 12,000 MVA.

With completion of all ongoing projects and completion ongoing acquisition, the network is expected to increase from around 5,000 Ckt Kms to 12,300 ckt kms.

The two companies said in a joint statement on Wednesday that the deal would involve sale of three operating assets operating in India -  100 per cent stake of Western Region Strengthening System Scheme B (WRSSS B) that has capacity of around 2089 ckt kms; 100 per cent stake of Western Region Strengthening System Scheme C (WRSSS C) that has around 974 ckt kms and 74 per cent stake in Parbati Koldam Transmission Co Ltd that has around 458 ckt kms capacity.

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 per cent, the release stated.

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.

Adani Transmission 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.
 
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.

R- Infra had, in November last year, signed a non-binding term sheet with Canadian pension fund manager Public Sector Pension Investment Board (PSP Investments) to sell 49 per cent equity stake in its power business in Mumbai and adjoining areas.

R-Infra, which is keen on its defence business, is also exiting its road projects. It has also signed a deal to sell its cement business.

RInfra has completed monetisation of cement business and is in advanced stage of doing the same for roads and Mumbai power businesses.

"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," the statement added.

SBI Capital Markets Ltd acted as financial advisors to RInfra for this transaction.