Mumbai: Qatar Investment Authority has agreed to buy a minority stake of 25.1% in Adani Electricity Mumbai Limited (AEML) — the flagship power transmission and distribution asset in Gautam Adani’s empire. The 14-year-old sovereign wealth fund of the oil-rich Gulf nation will invest Rs 3,200 crore for a minority, valuing the business at around Rs 13,000 crore, Adani Transmission said in a regulatory filing.
ET was the first to report about this impending transaction in its edition dated September 20.
Adani Electricity Mumbai Limited, the country’s largest private sector integrated power utility, is a wholly owned subsidiary of Adani Transmission. In August 2018, Anil Ambani sold his Mumbai power distribution business to Adani Transmission Ltd (ATL) for Rs 12,700 crore, allowing the latter to enter the discom business. Subsequently, the Mumbai business got housed under a dropdown subsidiary. ATL is 74.92% owned by Adanis and 25.08% by public shareholders.
The funds are likely to help provide growth equity to the business and also deleverage the balance sheet. The company has also earmarked a capex of Rs 1,200 crore for maintenance, upgrade of its existing distribution network and capital addition.
The Mumbai licence area has two 250 MW coal based generation power plants at Dahanu. The licence is valid till 2036 and has long term PPAs upto February 2023 with Mumbai distribution business. The company’s revenues for 7 months ending March 2019 was Rs 4200 crore, EBITDA was Rs 806 crore and PAT was Rs 43 crore.
As a group, Adanis have looking at strategic partnerships across gas distribution, petrochemicals, renewables with marquee players like Total, BASF to de-risk its portfolio. “This will be more of a financial investment with a reputed sovereign wealth fund that also has operational expertise in infrastructure, especially power sector,” said a long-time Adani Group observer on the condition of anonymity. Adani is already in advanced negotiations with Total SA for selling around 30% stake in in his city gas distribution company Adani Gas for around Rs 5,500 crore. The move that will eventually see the French energy giant become an equal equity partner in the company along with promoter Gautam Adani. Interestingly, QIA is also an investor in Total SA.