Reliance Infrastructure To Sell Transmission Business To Adani To Reduce Debt
The proceeds from the sale of assets will be utilised entirely for debt reduction.
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Anil Ambani-led Reliance Infrastructure Ltd. signed a binding term sheet for the sale of its transmission assets to Adani Transmission Ltd. The proceeds from the sale will be used entirely for debt reduction, the company said in a press release, without disclosing the deal size.
Reliance Infrastructure’s long-term borrowing stood at Rs 21,806.5 crore as of March 31, 2016. The total debt of the company, including short-term debt, was Rs 42,356.9 crore, according to the company’s March 2016 earnings report.
The sale is expected to be completed in the current financial year, Adani Transmission said in a separate press release.
Reliance Infrastructure values its transmission business at Rs 7,000 crore, according to data available on its website.
Three transmission assets are part of the transaction:
- Fully-owned Western Region System Strengthening Scheme B and C transmission projects in Maharashtra, Gujarat, Madhya Pradesh, and Karnataka
- Parbati Koldam Transmission Company Ltd. with assets in Himachal Pradesh and Punjab, which is a joint venture with Power Grid Corporation of India Ltd.
All three transmission projects are completed and revenue generating, Reliance Infrastructure said in its press release.
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 percent, according to Adani’s release.
The transaction is in line with the strategic plan of monetising the non-core business and focusing on major growth areas like defence and engineering, procurement and construction business.Reliance Infrastructure Press Release
Reliance Infrastructure had been looking to sell assets in the cement and roads business in order to reduce overall debt. In August this year, the company sold its cement business to Birla Corporation in a Rs 4,800 crore deal.
The monetisation of roads and the Mumbai power businesses are in an advanced stage, the release stated.
The company’s focus is to be debt free on a standalone basis, Anil Ambani had said at the annual general meeting in September.
Following the announcement, shares of Reliance Infrastructure jumped as much as 2.7 percent to Rs 606.4. Adani Transmission, which had jumped as much as 11.1 percent in early trade, was trading at Rs 44.5 as of 2:20 p.m.