Reliance Acquires 26% Stake in Mahan Energen Power Unit in Ambani-Adani Deal

By siliconindia  |  Friday, 29 March 2024, 09:58:56 AM IST

Reliance Acquires 26% Stake in Mahan Energen Power Unit in Ambani-Adani Deal
Reliance Industries Limited (RIL) and Adani Power have recently entered into a significant strategic collaboration, marking a rare partnership between two of India's wealthiest conglomerates. The agreement entails a 20-year power purchase agreement for 500 MW of electricity.
As part of this collaboration, RIL will invest Rs 50 crore to acquire a 26% stake in a 600MW unit of Mahan Energen's thermal power plant, a subsidiary of Adani Power. Mahan Energen has agreed to allot 50 million equity shares of Rs 10 face value each to RIL at par, in accordance with the Electricity Rules, 2005. The purpose behind this investment has not been explicitly disclosed by RIL.
Adani Power specified that one unit of the Mahan thermal power plant, with a capacity of 600 MW out of its total capacity of 2,800 MW (which is expected to expand to 4,400 MW over the next decade), will be designated as a captive unit for this collaboration. The Mahan thermal power plant is located in Singrauli district, Madhya Pradesh, and currently has a capacity of 1,200 MW.
Adani Group has been investing around Rs 30,000 crore to enhance Mahan Energen's power generation capacity. The acquisition of Mahan Energen by Adani Power was completed for Rs 4,250 crore in March of the previous year, following a successful bidding process in June.
Regarding the financials, Mahan Energen's turnover for the fiscal years FY21, FY22, and FY23 were Rs 692.03 crore, Rs 1,393.59 crore, and Rs 2,730.68 crore, respectively. RIL emphasized that the investment is not a related party transaction, and none of its promoters or group companies have any interest in it. The deal is subject to customary conditions, including requisite approvals by Mahan Energen.
In a separate regulatory announcement, Adani Power disclosed the consolidation of various short-term loan facilities worth Rs 19,700 crore, previously availed by six special purpose vehicles (SPVs), into a single long-term debt. This consolidation, under a consortium financing arrangement comprising eight lenders, became possible after Adani Power's credit rating was enhanced to AA. The company expects to benefit from a uniform tenure and a reduced effective interest rate under this revised arrangement.

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