Within hours of announcing acquisition of REC Solar Holdings for $771 million, Reliance Industries announced on Sunday that its subsidiary will acquire a 40 per cent stake in Sterling & Wilson Solar Ltd through a combination of primary investment, secondary purchase and open offer for around Rs 2,850 crore.
Reliance New Energy Solar Ltd (RNESL), a subsidiary of Reliance Industries, will first acquire 15 per cent in Sterling & Wilson by way of a preferential allotment of 29.3 million equity shares (equivalent to 15.46 per cent post preferential share capital) at Rs 375 per share. RIL will also acquire 18.4 million equity shares by RNESL from SP group company (equivalent to 9.7 per cent post preferential share capital) at a price of Rs 375 per share. This will cost RIL about Rs 1,100 crore.
The company will also acquire 25.9 per cent stake by way of an open offer at the same price. But as the current market price of S&W Solar is Rs 435 a share, the shareholders may not tender shares at the offer price. RNESL will hold 40 per cent of the equity capital of SWSL, consequent to acquisition in the open offer, follow-on acquisition of shares from SPCPL and chairman and co-founder of the company, Khurshed Daruvala, and sell down, if required. The promoters own 69.36 per cent stake in the company, which has a market valuation of Rs 6,972 crore as on Friday.
Analysts said the acquisition will help Reliance to make inroads into Middle East markets where SWSL has a strong presence. SWSL stake was on sale after the SP group defaulted on bank loans and was facing a severe liquidity crisis. As part of its one-time debt restructuring plan, SP group was to sell assets and utilise the proceeds to repay banks.
“We welcome SWSL as a strategic partner towards building our new energy platform. SWSL, with its engineering talent, deep domain knowledge, global presence, and experience of executing some of the most complex projects globally, will become an important part of our solar value chain,” Mukesh Ambani, Chairman of Reliance Industries, said. “This will enable us to deliver our comprehensive, end-to-end ecosystem leading to cost-efficient green energy for Indian consumers,” he said.
With 11-plus GW of solar turnkey projects executed globally and more than five decades of engineering experience, SWSL is a leading and highly reputed international EPC and O&M service provider in the renewables sector. The company has a 3,000-strong team and presence across 24 countries, and it provides a comprehensive range of solar energy turnkey solutions including design, procurement, construction, project management and operations and management.
“We are happy to welcome Reliance in Sterling and Wilson Solar Ltd. Through the decades, spanning three generations, the Shapoorji Pallonji group has helped Sterling and Wilson become a global leader in providing turnkey solutions in the energy value chain,” Shapoor Mistry, Chairman of Shapoorji Pallonji & Co. Pvt. Ltd, said. “SWSL is now well-poised to make a valuable contribution, as the world transitions to a low-carbon economy. I believe this partnership is beneficial to all stakeholders and will greatly contribute to making India a leading green energy powerhouse.”