Qatar Investment Authority (QIA) has completed acquisition of 25.10% stake in Adani Transmission’s arm Adani Electricity Mumbai (AEML) along with an investment in shareholder subordinated debt in the company on Monday, the Gautam Adani-led company said on Tuesday.
QIA’s total investment in AEML is around Rs 3,220 crore, which includes equity consideration of Rs 1,210 crore and a shareholder subordinated debt of $ 282 million (approximately Rs 2,010 crore). The two companies had signed a definitive agreement for the transaction on December 11 and subsequently received requisite approval for it.
“Entire equity proceeds of 25.1% stake sale in AEML has been used by ATL towards return of the perpetual (securities) to the tune of Rs 1,209.62 crore in favor of contributory promoter entity. Perpetual was infused by promoter entity to acquire AEML. Post return of Rs 1,209.62 crore, promoter perpetual outstanding has got reduced to Rs 2,544.38 crore,” Adani said in a statement.
India’s power distribution sector, which is heavily regulated, is dealing with huge debts and muted cash flows, causing stress to the entire supply chain. The government’s ambitious Ujwal DISCOM Assurance Yojana (UDAY) scheme of 2016, which aimed to reform the power distribution companies’ performance to reduce stress in the sector, has failed to deliver.
Adani Electricity Mumbai supplies electricity to the Mumbai license area, after it acquired the business from Anil Ambani-led Reliance Infrastructure in a deal valued at Rs 13,251 crore in 2017.
Reliance Infrastructure had earlier failed to get foreign investors to invest in the same business, as investors were wary of the issues in the sector. In 2015, it had even entered into an agreement to explore a stake sale with Public Sector Pension Investment Board (PSP Investments) of Canada but those talks fell through. Industry watchers believe the QIA investment may prompt long-term overseas investors to re-look at opportunities in the country, albeit selectively.
AEML has recently completed an investment grade, $1 billion bond issuance, the first by a private integrated utility from India.
Source: Economic Times