Greenko looks to buy Reliance Infra Mumbai electricity biz for Rs 14,000 cr

Renewables company Greenko, backed by Singapore's GIC and Abu Dhabi Investment Authority, is seeking to buy the Anil Ambani-led Reliance Infrastructure's Mumbai electricity business for Rs 13,000-14,000 crore ($2.15 billion), the Economic Times reported on Monday while citing sources familiar with the development. 

According to the financial daily, Greenko has submitted a time-bound and non-binding offer and is waiting for Reliance Infra's response to enter into exclusive negotiations. However, the report added that the offer would cease to be valid this week unless Greenko and Reliance Infra agreed to exclusive negotiations. 

The financial daily quoted a senior executive aware of the matter as saying that while the sellers would try to get the best price possible through a "competitive auction-like scenario", some of the "strategic players" could pull out over such a process. Backed by lenders like the State Bank of India and the Standard Chartered Bank, Gujarat-based Torrent Power and the Adani Group are also in the race and are evaluating the Mumbai electricity business, the report said, adding that Prem Watsa's Fairfax and the Tata Group, according to executives in the know, could also get involved.

Earlier, in late August, media reports had said that Greenko was in talks with Reliance Infra to acquire its Mumbai electricity business. However, these earlier reports had pegged the enterprise value of the proposed acquisition at Rs 10,000-13,000 crore. 

Reacting to the initial reports of Greenko's interest in its business, Reliance Infra had said in a BSE filing: "The company is engaged on various initiatives to unlock value in existing businesses, including inter alia the Mumbai power business, roads and transmission, and to thereby significantly reduce its overall leverage." 

As reported earlier, the Mumbai business caters to 3 million customers, making it the country's largest private sector integrated power utility. The firm has 1,800 Mw of distribution, generation facilities, and over 1,000 km of underground network. The distribution franchise is nine decades old, with the licence valid till August 2036.

Anil Ambani-promoted Reliance Infra reported a 24 per cent dip in its consolidated profit for the first quarter of financial year 2018 on account of higher expenses.

As reported earlier, for the April-June 2017 quarter, the company reported a net profit of Rs 334.17 crore, 24 per cent lower from Rs 438.8 crore reported in the same period a year ago. Total income for the company was Rs 8,085.8 crore, five per cent higher from Rs 7,711.71 crore. Expenses were higher by six per cent at Rs 7,490 crore, against Rs 7,080 crore reported in the corresponding quarter a year back.