RInfra to sell 49% stake in power biz for up to 4k crore

Reliance Infra will sell 49 per cent equity stake in its integrated power business in Mumbai and adjoining areas for up to Rs 4,000 crore to Canada's Public Sector Pension Investment Board (PSP Investments).
"Reliance Infra will sell 49 per cent stake in its integrated power business in Mumbai and adjoining area for Rs 3,500 crore to Rs 4,000 crore to the Canada's pension fund PSP Investments," a source privy to the development said.
Earlier in the day, the company, a part of Anil Ambani led Reliance Group had said in a BSE filing that it will sell the said stake and will utilise proceeds of stake sale to reduce debt.

The source further said that total debt on the RInfra books is around Rs 16,000 crore which will come down by 70 per cent after this deal.
"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," it added.
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.

The source said that total enterprise value of the SPV will be around Rs 15,000 crore.

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 Canadian 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 including generation, transmission, distribution and power trading.