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Adani Transmission In Talks To Buy Reliance Infrastructure’s Mumbai Operations  

The proposed transaction will allow Adani Transmission to foray into the distribution business and help Reliance Infrastructure reduce debt.

Power lines hang over building tops in Mumbai, India. (Photographer: Prashanth Vishwanathan/Bloomberg)
Power lines hang over building tops in Mumbai, India. (Photographer: Prashanth Vishwanathan/Bloomberg)

Adani Transmission Ltd. surged as it entered into exclusive talks to acquire Reliance Infrastructure Ltd.’s Mumbai power operations.

The exclusivity period for the deal to purchase Reliance Infrastructure’s power generation, transmission and distribution business will end on January 15, both companies said in separate stock exchange filing but cautioned that the proposed transaction is subject to certain approvals and there is no certainty it will result in a deal.

Reliance Infrastructure plans to utilise the proceeds of the deal to reduce debt and strengthen its financial position, it said in the filing. The company’s debt stood at Rs 25,800 crore by the end of the financial year 2016-17.

Shares of Adani Transmission jumped 10 percent, the most in five months, to Rs 193.25 apiece, while shares of Reliance Infrastructure rose as much as 3.5 percent to Rs 494 apiece.

A distribution unit in Mumbai will strengthen the Gautam Adani-led company’s footprint in the power transmission sector and mark its foray into the distribution space. Reliance Infrastructure has already been looking to monetise its cement, road and telecom tower assets and the Mumbai Power business to reduce overall debt.

Given the recent sale of its cement unit, plans to monetise its road assets through an initial public offering of its infrastructure investment trust, and now the proposed sale of its transmission business, Reliance Infrastructure “has been deleveraging its balance sheet on war-footing front,” Rohit Natarajan of IDBI Capital Markets & Securities told BloombergQuint over the phone.

Reliance Infrastructure had earlier been in talks with Canada’s Public Sector Pension Investment Board for the Mumbai power business, saying in November 2015 that it signed a non-binding term sheet to sell 49 percent of the assets.