Adani co rallies 5% on bid for Rel Infra’s Mumbai assets
Mumbai: The stock price of Adani Transmission (ATL) rose sharply on Wednesday, closing nearly 5% higher at Rs 203 on BSE, on the news that the company was in talks to buy Reliance Infrastructure’s power generation, transmission and distribution businesses in Mumbai. Rel Infra stock, on the other hand, closed 2.5% lower at Rs 466.
Rel Infra on Tuesday said that it has entered into exclusive negotiations with ATL until mid-January 2018 for the sale of its Mumbai assets, which is reportedly valued at Rs 13,000-14,000 crore.
Rel Infra “intends to utilise the proceeds of the proposed transaction entirely to reduce its debt, and further strengthen its financial position to tap mega growth opportunities in defence and EPC for the infrastructure sector,” it said. Rel Infra has a debt of Rs 25,800 crore on its books.
Meanwhile, international agency Moody’s Investor Service said that ATL’s rating will not be immediately affected as no binding offer has been made by the company for Rel Infra’s Mumbai assets. If a successful transaction emerges, then it may negatively impact ATL’s credit profile, given the significance of the transaction and the likelihood that it would be substantially debt-funded, Moody’s said.
In the last two years, Anil Ambani-led Rel Infra had initiated talks with at least three entities for the same Mumbai assets, the company’s crown jewel, but the deals did not fructify.
In 2015, Rel Infra signed an agreement with Canadian pension fund, Public Sector Pension Investment Board to sell 49% in its Mumbai assets for an enterprise value of Rs 15,000 crore. Again, in August this year, there were reports that Greenko, one of the country’s leading renewable energy companies, was in discussions with Rel Infra to buy its Mumbai assets. Reports also suggested that Ahmedabad-based Torrent Power and India-born Canadian billionaire Prem Watsa’s Fairfax Group were also in talks with the company to buy its Mumbai assets.