Adani Enterprises to demerge and list solar business

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Adani Enterprises Limited said it will demerge Adani Green Energy Ltd by cancelling the shares it holds in the subsidiary and issuing new shares directly to the shareholders of the parent company.

Shareholders will get 761 shares of the new company for every 1,000 shares they hold in the parent company.

They do not have to tender their existing shares to receive the new shares. The new company, Adani Green Energy Ltd, will be listed on the BSE and the NSE.

Adani Enterprises Ltd, which is present in a wide variety of infrastructure related business, said the move will help the renewable energy unit attract investors more in tune with the risk profile of the business.

The green energy unit is present in areas such as solar power farms and trading of equipment, which are considered emerging areas of growth, while the rest of the businesses of the company have lower risk profile as well as slower growth trajectories.

The new company will be the largest independent renewable power producer having a total portfolio of 2148 MW in India.

The group has 2148 MW of renewable energy capacity, including those under development. Out of this, solar accounts for 1988 MW.

At present, the operating capacity is at 1128 MW.

“The entire capacity has been tied up under 25 year PPA with diversified sovereign off-takers,” it said.

RATIONALE

“Each of the varied businesses being carried on by AEL either by itself of through its subsidiaries or through associate companies including Renewable Power Business, have significant potential for growth and profitability,” it said.

“The nature of risk, competition, challenges, opportunities and busineSS methods for Renewable Power BUSiness is separate and distinct from other businesses being carried out by AEL.”

The transaction will unlock the value of Renewable Power business eliminating holding company discount and providing financial flexibility for raising capital, it added.

“The Renewable Power Business and the other businesses of AEL are capable of attracting a different set of investors, strategic partners, lenders and other stakeholders,” it pointed out.

It also noted that the emerging businesses need to have a different style of management.

“These are also differences in the manner in which the renewable power business and other businesses of AEL are required to be handled and managed, in order to lend greater and enhanced focus to the operation of the said businesses,” it said.

“The demerger would enable greater and enhanced focus of the management in the Renewable Power Business and other businesses whereby facilitating the management to efficiently harness opportunities for each of the said businesses,” it added.

The demerged renewable energy business had a turnover of around Rs 8,595 cr in the year ended March, Adani Enterprises said. This accounted for about 9.5% of the company’s total revenue.

The transaction contemplated under the Scheme is expected to close by first quarter of 2018. The date for the transfer of the business to the new company has been fixed at April 01, 2018.

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