Adani Transmission to buy Reliance Energy from RInfra for $2.9bn

Energy acquisition news : Adani Transmission Limited has struck a deal to acquire Reliance Energy, the integrated Mumbai power business of Reliance Infrastructure (RInfra) for Rs 18,800 crore ($2.9 billion).

Valued at Rs12,101 crore ($1.9 billion), Reliance Energy will bring along with it regulatory approved assets in the transaction which are worth about Rs 1,150crore ($179.5 million) as of now.

Additionally, Adani Transmission is set to add assets worth Rs 5,000 crore ($780.5 million) from the deal which are expected to get regulatory approvals. RInfra will also get Rs 550 crore ($85.86 million) in net working capital from the Reliance Energy transaction.

Reliance Energy business comprises power generation, transmission and distribution of electricity across the suburbs of Mumbai.

The sale of Reliance Energy will help RInfra from getting out of its debt and make the company Rs 3,000 crore ($468.3 million) cash surplus.

Adani Transmission’s Mundra Dehgam Transmission Line. Photo courtesy of Adani Group.

For Adani Transmission, the acquisition of Reliance Energy represents its entry into the electricity distribution sector in India while also strengthening its footprint across the power transmission business.

Commenting on Adani Transmission acquisition of Reliance Energy, Gautam Adani – the Chairman of Adani Group, said: “We see the distribution sector as the next sun rise sector as India embarks on its mission to achieve 24×7 power for all. We see a massive growth opportunity and will look at both organic and inorganic opportunities to build a market leading Distribution Company.

“With this acquisition, Adani Transmission will enjoy benefit of scale and of being an integrated distribution and transmission business in India.”

Currently, Reliance Energy supplies electricity to nearly three million consumers in a licensed area of 400 sq kms in Mumbai while having the capability of covering a peak demand of over 1.8GW.

Reliance Energy has revenues of Rs 7,500crore ($1.17 billion) to its credit. The company draws its electricity from the Dahanu Thermal Power Station in Dahanu, Maharashtra, which has a capacity of 500MW.

Adani Transmission acquisition of Reliance Energy will be closed subject to regulatory and other required approvals.