RIL picks up 40% stake in SP Group's solar JV for Rs 2,845 cr

Mumbai: 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 2,845 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 selling Eureka Forbes for Rs 4,400-crore to the American private equity Advent International, for Reliance this is the second solar acquisition in a day.

Reliance is carrying out the deal through its fully owned subsidiary Reliance New Energy Solar (RNESL), which will acquire 40 per cent (post-preferential allotment to RIL) in Sterling & Wilson Solar (SWSL) through a combination of primary investment, secondary purchases and an open offer, the companies said in a joint statement, without quantifying the deal value. It added that RIL will get to nominate two board members.

Explaining the deal structure, a Reliance official said that pre-deal SWSL has 16.04 crore equity shares. As part of the deal, RNESL will first infuse Rs 1,100 crore into SWSL for a 15.46 per cent equity through a preferential issue of shares aggregating to 2.93 crore, thus increasing the equity share of SWSL to 18.97 crore, of which Reliance will buy 40 per cent through the sell down of 1.84 crore equity shares or 9.7 per cent of post-preferential shares by the promoters Shapoorji Pallonji & Company and Daruvalas at a price of Rs 375 per share— which is at a heavy discount to Friday's closing price of Rs 434.80.

In the final step to meet the Sebi norms, RNESL will go in for a public offer to acquire up to 4.91 crore equity shares, or 25.9 per cent of paid up equity post preferential issue.

"Once the whole structure is completed Reliance will hold 40 per cent of the post preferential share capital or 7.59 crore shares at a price of Rs 375 per share, aggregating the total investment including a full subscription of the open offer at Rs 2,845 crore," the official said.

Reliance New Energy Solar is picking up shares from Shapoorji Pallonji & Company, Khurshed Daruvala (the founding chairman of the company) and Sterling & Wilson Solar, the statements said. Currently in Sterling & Wilson Solar, the Mistrys hold 50.6 per cent, the Daruvalas own 17.9 per cent and the rest is with the public.

Reliance 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 providers. The deal goes a long way for the SP Group to cut debt which at the group level is around Rs 20,000 crore.

For the debt-laden 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. The sale will help the over 156-year-old SP Group, which owns 18.34 per cent in the Tata Group, pare its debt pile of over Rs 20,000 core and sharpen the focus on their flagship construction and engineering business under Afcons.

Earlier in the day, RIL announced buying out the Norwegian solar panel maker REC Solar Holdings for $771 million from China National Bluestar Group Company.

Reliance New Energy Solar Ltd (RNESL), a wholly-owned subsidiary of RIL, acquired "100% shareholding of REC Solar Holdings AS (REC Group) from China National Bluestar (Group) Co Ltd for an enterprise value of $771 million," the firm said in a statement.

The acquisition will help the Indian giant expand in green energy markets globally, including the US, Europe, Australia and elsewhere in Asia.

REC makes solar grade polysilicon and solar panel and modules at facilities in Norway and Singapore, and has more than 1,300 employees globally, the statement said.

Reliance said it will use REC's technology to manufacture metallic silicon and solar panels at its gigafactory at Jamnagar in Gujarat, with initial annual capacity of 4 gigawatts, eventually rising to 10GW.

Ambani had at the RIL annual general meeting announced spending of Rs 60,000 crore on creating clean energy manufacturing capacity and Rs 15,000 crore on the value chain and technology.

The purchase of the Norwegian solar panel maker is part of the $2 billion Ambani had earmarked for acquisitions to create clean energy capabilities.

"It is in line with our strategy of investing in new and advanced technologies and operating capabilities aimed at achieving Reliance's goal of enabling 100 GW clean and green energy before the end of this decade," Ambani said in the statement.

Having committed to net-zero carbon by 2035, India's largest company by market value plans to build solar photovoltaic panels, batteries, hydrogen fuel cells, and electrolysers over the next three years.

The plan comes as companies and investors globally switch to sustainable investments and seek suppliers with similar commitments to curb greenhouse emissions. Reliance plans to install 100-GW solar capacity by 2030 to become one of the largest domestic players with more than 30 per cent market share.