Reliance Infrastructure (RInfra) on Monday signed a non-binding term sheet with Canada’s PSP Investments in relation to the acquisition of 49% equity stake in Reliance Infrastructure’s integrated power generation, transmission and distribution business in Mumbai.
PSP Investments is one of Canada’s largest pension funds. While the term sheet – a preliminary agreement that mentions the terms at which an investor will put in money – does not indicate completion of the agreement, the conditions in the agreement say that the power distribution business will be housed in a special purpose vehicle.
“The proposed transaction is subject to due diligence, applicable regulatory and other approvals and may also result in no transaction. RInfra will own the controlling 51% stake and PSP Investments will own 49% in the SPV,” said a RInfra statement which also mentioned that the two companies have agreed on an exclusivity agreement to be valid till March 31, 2016, implying that RInfra and PSP will not engage with other companies.
RInfra’s Mumbai power business (Reliance Energy) distributes power to nearly 3 million residential, industrial and commercial consumers in the suburbs of Mumbai, covering an area of 400 sq km, and catering to a peak demand of over 1,800 MW, with revenues of Rs 7,700 crore.
RInfra is one of the largest infrastructure companies, developing projects through various SPVs in several high growth sectors within the infrastructure space such as power, roads, metro rail, cement and defence.