Adani to buy Rinfra's transmission assets in a Rs2,000-cr deal
08 December 2016
Adani Transmission Ltd has agreed to buy Reliance Infrastructure's two transmission assets in the Western Region System Strengthening Scheme (WRSSS) and a 74-per cent stake in the Parbati Koldam Transmission Company Limited (PKTCL) – in a deal that will help Reliance Infrastructure pare its debt by an estimated Rs2,000 crore.
Adani Transmission Ltd has entered into a share purchase agreement with Reliance Infrastructure Ltd to acquire the latter's Western Region System Strengthening Scheme (WRSSS) power transmission assets of about 3,100 circuit km at an enterprise value of Rs1,000 crore.
RInfra owns India's first private sector transmission projects - WRSSS B and WRSSS C - located in Maharashtra, Gujarat, Madhya Pradesh and Karnataka.
In October, the two companies had signed a binding term sheet agreement for Reliance Infra's three operational transmission projects - WRSSS B, WRSSS C and Parbati Koldam Transmission Co Ltd.
As per the term sheet signed in October, Adani Transmission Ltd (ATL), the largest private power transmission company operating in India, was to acquire:
- 100 per cent stake of Western Region Strengthening System Scheme B (WRSSS B) – around 2089 circuit (ckt) km;
- 100 per cent stake of Western Region Strengthening System Scheme C (WRSSS C) – around 974 ckt km; and
- 74 per cent shares of R-Infra in Parbati Koldam Transmission Company Limited (PKTCL). PKTCL is a joint venture between R-Infra and Power Grid Corporation of India Limited (PGCIL). R-Infra holds 74 per cent equity stake and PGCIL holds 26 per cent equity stake in the Company – around 458 ckt kms.
While the WRSSS transmission business is valued at around Rs1,000 crore, a 74-per cent stake in PKTCL also has a similar valuation.
A share purchase agreement for PKTCL will be signed after an approval from Power Grid Corporation India Limited (PGCIL).
PKTCL is located in Himachal Pradesh and Punjab. With the completion of the acquisition, Adani's transmission network will surpass 10,000 circuit km.
Reliance Infrastructure intends to utilise the proceeds to pay off its debt. These deals will help the firm pare its debt by Rs2,000 crore.
SBI Capital Markets Limited is acting as the financial advisor to RInfra for this transaction.
Reliance Infrastructure has a standalone debt of Rs14,000 crore, which will go down by Rs1,500 crore to Rs12,500 crore after the deal while its consolidated debt, which stands at Rs 21,000 crore, is expected to come down to Rs19,000 crore.
Reliance Infrastructure has on 26 November, announced plans to raise Rs5,000 crore through sale of a 51 per cent stake in its newly-formed Infrastructure Investment Trust (InvIT), which received approval from market regulator Sebi. (See: Reliance Infra to raise Rs5,000 cr via sale of stake in investment trust)
As part of the plans to offload its non-core businesses, Reliance Infra, in August this year, had sold its cement arm to Birla Corporation for Rs4,800 crore.
The company is also in talks with Brookfield Asset Management to sell its road sector business, and is also looking to monetise its power transmission business in Mumbai.