Heavyweight Collaboration: In A First, Reliance Picks Up 26% Stake In Adani Power Project

Mumbai: This is what you call a heavyweight collaboration.

In a first-of-its-kind collaboration between rival billionaires, Mukesh Ambani’s Reliance Industries acquired a 26% stake in one of Gautam Adani’s power projects in Madhya Pradesh power project.

Reliance will pick up 5 crore equity shares in Mahan Energen Ltd, a wholly owned subsidiary of Adani Power Ltd, of face value Rs 10 at par (Rs 50 crore) and will use 500 MW of generation capacity for captive use, the two firms said in separate stock exchange filings.

India and Asia’s top two businessmen have so long minded their own business despite often being pitted against each other by media and commentators.

They rarely crossed each other’s paths with Ambani’s interests on oil and gas, retail and telecom, while Adani’s focus has been on infrastructure spanning sea ports to airports, coal and mining.

Adani aspires to be the world’s largest renewable energy producer by 2030, while Reliance is building four gigafactories at Gujarat’s Jamnagar — one each for solar panels, batteries, green hydrogen and fuel cells.

Adani is also building three giga factories for manufacturing solar modules, wind turbines and hydrogen electrolysers.

A clash between the giants was predicted when Adani Group applied to participate in an auction of spectrum or airwaves capable of carrying fifth generation (5G) data and voice services. However, unlike Ambani, Adani bought 400 MHz spectrum in the 26 GHz band, which is not for public networks.

“Mahan Energen Ltd (MEL), wholly owned subsidiary of Adani Power Ltd (APL), has entered into a 20-year long-term power purchase agreement (PPA) for 500 MW with Reliance Industries Ltd (RIL), under the captive user policy as defined under the Electricity Rules, 2005,” Adani Power said in the filing.

“In order to avail the benefit of this policy, RIL has to hold a 26 per cent ownership stake in the captive unit in proportion to the total capacity of the power plant. It will accordingly invest in 5 crore equity shares of MEL, aggregating to Rs 50 crore for the proportionate ownership stake,” the filing said.

“This development brings between two corporates an exclusive arrangement for 500 MW of power purchase by Reliance Industries on a long-term basis.”

“In this connection, APL, MEL, and RIL have signed an investment agreement on 27th March 2024 at 7:00 pm. Closing of the transaction is subject to customary closing conditions including receipt of requisite approvals,” Adani Power said.

In a similar disclosure, Reliance stated: “MEL, a company engaged in generation and supply of power, was incorporated on October 19, 2005. The turnover of MEL, as per its audited standalone financial statement, for financial years 2022-23, 2021-22 and 2020-21 was Rs 2,730.68 crore, Rs 1,393.59 crore and Rs 692.03 crore, respectively.”

“The investment is subject to customary conditions precedent including receipt of requisite approvals by MEL and is expected to be completed within 2 weeks of receipt of completion of conditions precedent and receipt of such approvals by MEL,” it added.