The Shapoorji Pallonji Group is selling a 40% interest in Sterling & Wilson Solar., a solar EPC joint venture it has in collaboration with the Khurshed Yazdi Daruvala family. Shapoorji Pallonji Group is selling its shares to Reliance Industries for Rs 1,100 crore in a multi-stage deal as part of its strategy to deleverage its strained balance sheet.
While this is the second asset sale for the SP Group, helmed by Shapoorji Pallonji Mistry, in less than a month following the Rs 4,400-crore transaction for Eureka Forbes with American private equity Advent International, this is Reliance’s second solar acquisition in the same day.
Earlier in the day, RIL announced that it will purchase REC Solar Holdings, a Norwegian solar panel manufacturer, for USD 771 million from China National Bluestar Group Company.
Reliance is carrying out the deal through its wholly-owned subsidiary Reliance New Energy Solar, which will “acquire 40 percent in Sterling & Wilson Solar through a combination of primary investment, a secondary purchase, and open offer” for a total consideration of Rs 1,100 crore and will be able to nominate two board members, according to the companies.
Reliance’s goal of establishing and enabling up to 100 GW of solar energy by 2030, as well as being a worldwide leader in the renewable energy market, would be boosted by the agreement.
Reliance New Energy Solar, Shapoorji Pallonji & Company, Khurshed Daruvala, and Sterling & Wilson Solar are all part of the deal.
Reliance New Energy Solar would receive a preferential issuance of 2.93 crore equity shares (equal to 15.46% of the post-preferential share capital) at Rs 375 per share as the first part of the deal.
The company will then buy 1.84 crore equity shares, or 9.7% of the post-preferential share capital, from Shapoorji Pallonji & Company at Rs 375 per share; and finally, by Sebi takeover regulations, it will make a public offer to buy up to 4.91 crore equity shares, or 25.9%.
After all of this, the RIL arm will own 40% of Sterling & Wilson Solar, according to the joint statement.
Reliance New Energy Solar, managed by Mukesh Ambani, beat over bulge-bracket private equity firms Brookfield, CPPIB, and Adani Power, the world’s largest private-sector domestic power producer, to acquire Sterling & Wilson Solar, one of the world’s largest solar EPC solutions suppliers.
The agreement will help the SP Group reduce its debt, which is estimated to be approximately Rs 20,000 crore at the group level.