Reliance Infrastructure (RInfra) on Wednesday said that it has signed a binding term sheet with Adani Transmission (ATL) for sale of 100% stake in the company’s transmission assets. The company did not disclose the financial details of the deal, however, sources close to the development said it will be over R2,000 crore. The entire sales proceeds will be utilised to reduce debt. The company’s consolidated debt which stands at R21,000 crore, post the sale of RInfra’s cement business (R4,800 crore), will reduce further by around R2,000 crore after the completion of the sale of transmission assets. The deal is expected to close by March 2017.
As part of the deal, RInfra will be selling its Western Region System Strengthening Scheme (WRSSS) – B & C projects located in Maharashtra, Gujarat, Madhya Pradesh and Karnataka as well as its 74% stake in Parbati Koldam Transmission Company (PKTCL) located in Himachal Pradesh and Punjab in joint venture with Power Grid Corporation of India (PGCIL). All three transmission projects are completed and are generating revenue.
Lalit Jalan, CEO, Reliance Infrastructure told FE that the transaction is in line with the company’s plans of becoming asset light. “Our strategy is to exit all those businesses where we can’t be the leaders,” Jalan said as the reason for exiting cement, transmission and roads businesses.
Jalan said that with the sale of these businesses, the company’s future revenues will be coming from Mumbai distribution, where it is in talks to sell a minority stake to Canada-based PSP Investments, and its Delhi distrbution business. Also, EPC and defence will be major revenues garners for the company.
“We will renew our focus on EPC and will be bidding for more than R100,000 crore of orders in different sectors floated by the government. Our intermediate target is to get our construction order book back to R30,000 crore. Defence is a large focus area for us. Additionally, we will be entering a new business—operations and maintenance (O&M) and we are looking for O&M opportunities in sectors like power and urban transport and infrastructure,” he said.
The company statement said the transaction for transmission assets is subject to due diligence, definitive documentation, applicable regulatory approvals and certain other conditions. SBI Capital Markets Limited is acting as the financial advisors to RInfra for this transaction.