Shares of Reliance Infra jumped over 13% while Adani Transmission zoomed 10% on Thursday after the Reliance Infrastructure signed an agreement with Adani Transmission to sell its Mumbai power business. Reliance Infrastructure today signed a definitive binding agreement with Adani Transmission Ltd (ATL) for 100% stake sale of its Mumbai Power Business which includes the integrated business of generation, transmission and distribution of power for Mumbai, Reliance Infrastructure said in a press release. The stock of Reliance Infrastructure moved up 13.41% to the day’s high of Rs 528.75 on NSE while it rose 10.44% to the day’s high of Rs 508 on BSE on Thursday.
A huge trading volume was seen in the shares of Reliance Infrastructure as 1.05 crore shares exchanged hands on both BSE and NSE with about 95 lakh shares on NSE alone. Shares of Reliance Infrastructure ended up 9.85% at Rs 512.1 on NSE and 9.3% higher at Rs 509.5 on BSE. Following the development, shares of Adani Transmission also spiked in very quickly. The stock of Adani Transmission hit an upper circuit rising by 10% to Rs 225.3 on BSE.
The total deal value is at Rs 13,251 crore. This comprises of business valued at Rs 12,101 crore and regulatory assets approved so far of Rs 1,150 crore. In addition, regulatory assets under approval estimated at Rs 5,000 crore and a net working capital on closing estimated at Rs 550 crore will flow directly to Reliance Infrastructure. Total consideration value is estimated at Rs 18,800 crore. Reliance Infrastructure will utilize the proceeds of this transaction entirely to reduce its debt, becoming debt free and up to Rs 3,000 crore cash surplus. “This is the largest ever debt reducing exercise by any corporate, Reliance Infrastructure said. This monetization is a major step in Reliance Infra’s deleveraging strategy for future growth.
Reliance Infrastructure’s Mumbai power business (known as Reliance Energy) is an integrated power utility distributing power to nearly 3 million residential, industrial and commercial consumers in the suburbs of Mumbai, covering an area of 400 sq km. It caters to a peak demand of over 1,800 MW, with annual revenues of Rs. 7,500 crore with stable cash flows. Going forward, RInfra will focus on upcoming opportunities in asset light EPC and Defence businesses.