Reliance CleanGen Ltd, a 100 per cent subsidiary of Reliance Power Ltd, and Jaiprakash Power Ventures Ltd (JPVL), a subsidiary of Jaiprakash Associates Ltd (JAL), today announced the signing of an exclusive Memorandum of Understanding, for the 100 per cent acquisition by RCL of the entire hydroelectric power portfolio of JPVL, the company said in a statement here.
SBI Capital Markets Ltd is the advisor for the proposed transaction. While Reliance Power did not indicate how the transaction would be funded, JPVLs hydroelectric power portfolio has an aggregate capacity of nearly 1,800 MW, fully in operation and with an asset base of over Rs10,000 crore.
The JPVL portfolio comprises three plants, with an asset life of over 50 years, each using run-of-the-river technology to convert natural water flow to electricity, eliminating the need for a large reservoir.
JAL intends to utilise the entire proceeds of the proposed transaction to reduce its outstanding debt, and thereby deleverage its consolidated balance sheet, Reliance Power said. The completion of the proposed transaction would make Reliance Power the largest provider of hydroelectric power in the private sector in India, it added.
Currently, Reliance Power has hydroelectric power projects aggregating over 5,000 MW under development, of which 4,200 MW are located in Arunachal Pradesh, 700 MW in Himachal Pradesh and 400 MW in Uttarakhand.
India's Reliance to buy Jaiprakash's hydropower business
(Reuters) Reliance Power Ltd will buy Jaiprakash Power Ventures Ltd's entire hydropower business, the companies said on Monday, in a deal that would make billionaire Anil Ambani's group the largest private hydropower provider in India.
Reliance CleanGen Ltd, which with Reliance Power is part of Ambani's Reliance Group, has signed an exclusive memorandum of understanding with Jaiprakash to buy three power plants.
Reliance's bid for the business follows the collapse last week of a plan by Jaiprakash and parent Jaiprakash Associates Ltd to sell two of the three plants for $1.6 billion to an Abu Dhabi-led consortium.
The companies did not disclose the terms of the deal but local media estimated the hydropower portfolio's value at around 120 billion rupees ($2 billion). The plants have a total capacity of nearly 1,800 megawatts.
For Reliance, whose business empire includes technology, financial services and media assets, the plants would add to about 5,000 megawatts of hydropower capacity it is already developing, the company said in a statement.
Jaiprakash, which like many Indian power and infrastructure companies is trying to strengthen its balance sheet and revive profitability, said it would use the proceeds to pay down debt.
Shares of Jaiprakash Power were 3.7 percent higher by 0535 GMT, compared with a slight decline in the benchmark index . Shares of Reliance were up 2.5 percent.
(1 US dollar = 60.0950 Indian rupee)