22 Dec 2017 12:39 IST

RInfra to sell Mumbai power business to Adani for ₹13,251 crore

Will use proceeds to pare its debt of₹20,000 crore

Anil Ambani-backed Reliance Infrastructure Ltd (RInfra) has signed a definitive binding agreement with Adani Transmission Limited (ATL) to sell its Mumbai power business for ₹13,251 crore.

The deal includes RInfra’s integrated business of generation, transmission and distribution. The deal value comprises business valued at ₹12,101 crore and regulatory assets of ₹1,150 crore. “In addition, regulatory assets under approval estimated at ₹5,000 crore and net working capital on closing, estimated at ₹550 crore, will flow directly to RInfra. Total consideration value is estimated at ₹18,800 crore,” RInfra said in a statement.

RInfra will utilise the entire proceeds of this transaction to reduce its debt of ₹20,000 crore. The company’s Mumbai power business (known as Reliance Energy) distributes power to nearly 3 million residential, industrial and commercial consumers in the city’s suburbs, covering an area of 400 sq km. It caters to a peak demand of over 1,800 MW, with annual revenues of ₹7,500 crore and stable cash flows. “Going forward, RInfra will focus on upcoming opportunities in asset light EPC and defence businesses,” the statement said.

On the block for a while

RInfra has been trying to divest its Mumbai distribution business for the past three years. In 2015, it held talks with Canada’s PSP Investments for the sale of a 49 per cent stake in the discom. However, this did not result in a deal.

RInfra has been operating its distribution business in Mumbai for the last nine years, and has a licence valid till August 2036.

In November, the company had announced completion of the sale of its Western Region System Strengthening Scheme transmission undertakings to Adani Transmission Ltd for ₹1,000 crore.

The assets under the transaction include Western Region Transmission Maharashtra Project comprising 2,089-circuit km (Ckm) of transmission lines, and Western Region Transmission Gujarat project comprising 974 Ckm of transmission lines.

With this acquisition, ATL’s total network will be around 11,350 Ckm, of which approximately 9,000 Ckm are under operation, the company said in a statement.