As part of deleveraging its stretched balance-sheet, the Shapoorji Pallonji Group is divesting its second key asset within a month by selling 40 per cent stake in Sterling & Wilson Solar, the solar EPC joint venture it runs with the Khurshed Yazdi Daruvala family, to Reliance Industries for Rs 1,100 crore through a multi-stage transaction.
While for the SP Group led by Shapoorji Pallonji Mistry, this is the second asset sale within a month after the Rs 4,400-crore deal for Eureka Forbes it had inked with the American private equity Advent International, for Reliance this is the second solar acquisition in the very same day. Earlier in the day, RIL announced buying out the Norwegian solar panel maker REC Solar Holdings for USD 771-million from China National Bluestar Group Company.
Reliance is carrying out the deal through its fully-owned subsidiary Reliance New Energy Solar, which ”will acquire 40 per cent in Sterling & Wilson Solar through a combination of primary investment, secondary purchase and open offer” for total consideration of Rs 1,100 crore and will also get to nominate two board members, the companies said in a joint statement.
The deal will provide further thrust to Reliance’s commitment to establish and enable up to 100 GW of solar energy by 2030, and also become a global player in the renewable industry.
The deal is between Reliance New Energy Solar, Shapoorji Pallonji & Company, Khurshed Daruvala and Sterling & Wilson Solar.
As the first step of the deal, Reliance New Energy Solar will get a preferential allotment of 2.93 crore equity shares (equivalent to 15.46 per cent of the post- preferential share capital) at a price of Rs 375 per share. Then it will acquire 1.84 crore equity shares or 9.7 per cent post preferential share capital from Shapoorji Pallonji & Company at a price of Rs 375 per share; and then thirdly it will go for public offer to acquire up to 4.91 crore equity shares, representing 25.9 per cent in accordance with Sebi takeover regulations. After all this, the RIL arm will hold 40 per cent in Sterling & Wilson Solar, the joint statement said. Mukesh Ambani-led Reliance New Energy Solar has beaten bulge-bracket private equity funds such as Brookfield, the Canadian pension fund CPPIB and also the largest private sector domestic power producer Adani Power in bagging Sterling & Wilson Solar, which is among the world’s largest solar EPC solutions provider. The deal goes a long way for the SP Group to cut debt which at the group level is around Rs 20,000 crore.