Reliance Infrastructure (RInfra) has agreed to sell its integrated Mumbai power business, known as Reliance Energy to Adani Transmission Limited (ATL) for a sum of INR18,800crore ($2.9bn).

While Reliance Energy is valued at INR12,101crore ($1.9bn), the regulatory approved assets involved in the transaction till date are worth INR1,150crore ($179.5m).

Apart from that, the regulatory assets which are yet to be approved and estimated to be around INR5,000crore ($780.5m) along with about INR550crore ($85.86m) in net working capital will flow directly to RInfra.

The Mumbai power business of RInfra includes generation, transmission and distribution of power of the company in the capital city of the Indian state of Maharashtra.

RInfra plans to use the sale proceeds from the transaction to cut down its debt. The transaction will enable it to have zero debt and a cash surplus of INR3,000crore ($468.3m).

On the other hand, the acquisition for ATL, marks its foray into the power distribution space in India and also boost its presence in the power transmission sector.

Adani Group chairman Gautam Adani said: “We see the distribution sector as the next sun rise sector as India embarks on its mission to achieve 24×7 power for all. We see a massive growth opportunity and will look at both organic and inorganic opportunities to build a market leading Distribution Company.

“With this acquisition, Adani Transmission will enjoy benefit of scale and of being an integrated distribution and transmission business in India"

Reliance Energy supplies power to close to 3 million residential, industrial and commercial consumers across the suburbs of Mumbai, covering an area of 400km2.

The company is capable of meeting a peak demand of more than 1.8GW and has annual revenues of INR7,500crore ($1.17bn).

It generates power from the 500MW Dahanu Thermal Power Station (DTPS), located in Dahanu, Maharashtra. DTPS comprises two coal-based units of 250MW each.

The transaction will be completed after receipt of regulatory and other customary approvals.

Image: The 500MW Dahanu thermal power plant in Maharashtra. Photo: courtesy of Pakeezahskhan/