Canada's pension fund to buy 49% stake in RInfra's power biz

Canadian pension fund PSP Investments will acquire 49 per cent equity stake in Reliance Infra's integrated power generation, transmission and distribution business in Mumbai and adjoining areas.
"Reliance Infrastructure Ltd (RInfra) announced the signing of a nonbinding term sheet with Public Sector Pension Investment Board, in relation to acquisition by PSP Investments of a 49 per cent equity stake in its integrated power generation, transmission and distribution business in the city of Mumbai and adjoining areas," the company said in BSE filing today.
According to the statement, RInfra will utilise proceeds of sake sale to reduce debt.
The specified business is to be carved out on a going concern basis into a separate SPV, in which RInfra will own the controlling 51 per cent stake, and PSP Investments will own 49 per cent.

RInfra's Mumbai Power business (known as Reliance Energy) distributes power to nearly 3 million residential, industrial and commercial consumers in the suburbs of Mumbai, covering an area of 400 sq km, and catering to a peak demand of over 1,800 MW, with revenues of Rs 7,700 crore in 2014-15.
The parties have entered into an exclusivity agreement valid till March 31, 2016.

The proposed transaction is subject to due diligence, definitive documentation, applicable regulatory and other approvals and certain other conditions. Accordingly, there can be no certainty that a transaction will result. Further announcements will be made at an appropriate stage, the company said.

PSP Investments is one of the largest pension fund managers in Canada with Candian Dollar 112 billion of net assets under management as of March 31, 2015.
RInfra is engaged in developing projects through various Special Purpose Vehicles (SPVs) in several high growth sectors within the infrastructure space such as power, roads, metro rail, cement and defence.
It is also a leading utility company having presence across the value chain of power businesses i.E. Generation, transmission, distribution and power trading.
RInfra through its SPVs has executed a portfolio of infrastructure projects such as a metro rail project in Mumbai, eleven road projects with total length of 1,000 kms and cement plants of total capacity of 5.6 million tonnes in Madhya Pradesh, Maharashtra and Uttar Pradesh.

The company also provides Engineering, Procurement and Construction (EPC) services for developing power and road projects. It has recently entered into the defence sector.