Qatar to invest $450mn in Adani’s power unit
New Delhi, India - Qatar Investment Authority (QIA) is investing about US$450mn for a 25.1 per cent stake in a unit of Adani Transmission Ltd, the Indian company said in a filing on Wednesday.
The deal includes a subordinated debt investment by QIA, according to the filing, which said the two sides have signed a definitive agreement. The transaction is expected to be completed in early 2020 after obtaining regulatory approvals, it said.
The unit, Adani Electricity Mumbai Ltd, offers power distribution, transmission and generation for more than 3mn customers across Mumbai and handles about 55 per cent of the city’s electricity supply. Under the deal, more than 30 per cent of the subsidiary’s supplied electricity will be sourced from solar and wind power generation by 2023, according to the filing.
“With this deal, Adani Transmission has shown the will to systematically deleverage its balance sheet,” said Deven Choksey, managing director at Mumbai-based K R Choksey Shares & Securities Pvt. “This will give them room to acquire more such assets in future.”
Adani Transmission dropped as much as 4.8 per cent after the announcement, before reversing losses to trade 1.6 per cent higher as of 3:31pm in Mumbai on Wednesday. It had debt of R179bn as of September 30, according to data compiled by Bloomberg.
The QIA, which has about
US$320bn in assets, has been diversifying into the US and Asia, and deploying more resources at home, while moving away from traditional trophy assets. The wealth fund owns stakes in companies ranging from commodities giant Glencore Plc to Barclays Plc and Volkswagen
AG, as well as holdings as varied as New York office space, London residential property, luxury Italian fashion and even a football team.
SKN Advisors Ltd acted as financial advisor to Adani on the deal, while Cyril Amarchand Mangaldas was its legal adviser, according to the filing. JPMorgan Chase & Co, Cleary Gottlieb Steen & Hamilton LLP and AZB & Partners advised QIA.
The Economic Times reported in September that QIA was in talks to buy up to a quarter of the company for as much as R40bn and that sale proceeds would be used to aid the utility’s capital expenditures and debt repayment plans. The filing on Wednesday said the deal was valued at about R32bn. Adani signed a binding agreement in 2017 to buy the Mumbai power business from Reliance Infrastructure Ltd for R132.5bn.