Adani Transmission, Reliance Infrastructure Deal Hinges On This Key Factor

Adani Transmission, Reliance Infrastructure Deal Hinges On This Key Factor

Adani Transmission’s proposed exclusivity agreement to acquire the power generation, transmission and distribution assets of Reliance Infrastructure would be incidental on right valuation of assets as experts believe anything above two times the regulated equity of Rs 3,500 crore would be negative for the company.

“Two times of regulated equity would be around `7,500 crore. If Adani Transmission pays anything above that, it could be seen as negative for the financials of the company as funding the transaction would be difficult,” said an analyst with a Mumbai-based brokerage on the condition of anonymity.

Adani Transmission has total debt of Rs 8,660 crore as on March 31, 2017, while net debt to EBITDA is 4.09.

A successful acquisition of Mumbai distribution and generation assets would mark Adani Group’s entry into the distribution business. However, Moody’s Investors Services has kept Adani Transmission’s ‘Baa3’ senior unsecured rating unchanged as the ratings agency believes there was no binding offer made by the company, besides there is lot of uncertainty regarding final terms of any potential offer. Read More…

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