Anil Ambani’s Reliance Infrastructure Ltd. has agreed to sell its Mumbai power business to Adani Transmission Ltd. in a deal valued at Rs 13,251 crore to pare debt.
The company will sell 100 percent stake, valuing the business at Rs 12,101 crore and regulatory assets at Rs 1,150 crore, it said in an exchange filing. The transaction could fetch another Rs 5,000 crore through regulatory assets under approval and Rs 550 crore from net working capital. That would take the total consideration to Rs 18,800 crore.
The business includes generation, transmission, and distribution of power across Mumbai and caters to nearly 3 million residential, industrial, and commercial consumers in suburbs of the city covering around 400 square kilometres.
Reliance Infrastructure will use the proceeds to reduce its debt, it said. It will also be looking to monetise its cement, road and telecom tower assets to reduce overall debt, which stood at Rs 25,800 crore as of March 2017.
The entire money that we receive (Rs 13,800 crore) will be used to pay off the debt.So its not a question of transferring debt and equity
Lalit Jalan, CEO, Reliance Infrastructure
The entire deal is a cash transaction and is expected to be complete by March 31, 2018, he said while speaking to BloombergQuint.
After the entire deal is gone through (Rs 18,800 crore), the company is expected to be debt free and would remain with a surplus of Rs 3,000 crore.
“ The surplus 3000 crore is essentially shareholders’ money and we don’t need money for capital expenditure. On dividends or buyback, the board has to take a call on that,” Jalan said.
The Mumbai power business adds up to Rs 7,500 crore of annual revenues to Reliance Infrastructure, the company said.
The company going forward is expected to focus on its road construction and defense business, Jalan added.