Reliance picks up 26% stake in Adani's Mahan Energen power project

First instance of the two biz houses collaborating

In a first, the business houses run by Mukesh Ambani and Gautam Adani will enter into an investment agreement, by which Reliance Industries Ltd (RIL), controlled by Ambani, will pick up a minority stake in the latter’s Mahan Energen power project.

On Thursday, two companies -- Adani Power and RIL -- informed the stock exchanges of the investment agreement.

RIL entered into an investment agreement on March 27 with Mahan Energen, a wholly-owned subsidiary of Adani Power, where 50 million equity shares are to be allotted to RIL.

The equity shares, Adani Power said, came to Rs 50 crore.

It is India’s Electricity Rules, 2005, that has prompted RIL to pick a stake in Adani Power’s unit.

RIL has entered into a 20-year power purchase agreement with Mahan for its captive use.

RIL has said the investment agreement was following the provisions of the Electricity Rules, 2005, in terms of which it, as a captive user, is required to own 26 per cent proportionate ownership in one unit of Mahan of 600 megawatt (Mw), with RIL being the captive user of 500 Mw.

The Ambani company is expected to complete the deal within two weeks of completing some steps.

Industry watchers often consider the two billionaires as arch rivals, who are seen battling it out for the richest Indian tag on various lists of the rich. As of March 28 on the Bloomberg Billionaires Index, Ambani is the richest Indian with a net worth of $113.8 billion, with Adani as a close second with a net worth of $97.2 billion.

In terms of businesses, the two conglomerates largely stayed away from each other’s sector of operations until recently. With the acquisition of a majority stake in news channel NDTV, Adani is now a rival to Ambani’s TV18 broadcast media business.

Further, both conglomerates are executing a multi-billion investment plan to expand in the new energy segment, including solar manufacturing and green hydrogen production. While Adani Enterprises looks to market green hydrogen and its derivatives, RIL plans to use its production for captive use.
 

Adani family’s increased stake in Ambuja Cements highlights its commitment to boost prospects and potential of the cement vertical

Where they rival

Media: Adani Enterprises’ NDTV and RIL’s TV18 Broadcast are competitors in the TV news segment

New Energy: Both RIL and Adani Enterprises are setting up a new-energy value chain, including solar manufacturing to green hydrogen production in Gujarat

Compressed biogas: Adani Total Gas and RIL have plans to set up plants at different locations in India

Petrochemicals: RIL is India’s largest integrated petrochemicals producer, Adani Enterprises has plans to enter this segment