Competition Commission of India said on Wednesday it has cleared Reliance Industries Ltd.’s acquisition of Sterling and Wilson Renewable Energy Ltd. (SWREL) from its current shareholders including the Shapoorji Pallonji Group.
Reliance New Energy Solar Ltd, the new energy arm of Reliance Industries Ltd, has agreed to acquire a 40% stake in Indian multinational Sterling and Wilson Solar Ltd (SWSL), one of the largest PV plant engineering, procurement, construction (EPC), and operation and maintenance solution providers globally.
Reliance New Energy Solar Ltd aspires to march ahead in green segment in enabling cost-efficient green energy by having a presence in the end-to-end PV ecosystem from vertically integrated solar component manufacturing to project development.
Reliance New Energy Solar Ltd. is a newly incorporated entity which does not offer any products or services in India. RIL Group has presence in sectors such as hydrocarbon exploration and production, petroleum refining and marketing, petrochemicals, retail and digital services. The company getting acquired, SWREL, is an end-to-end solar engineering, procurement and construction (EPC) solutions provider in India and over 25 countries globally. In India, SWREL is engaged in provision of solar EPC solutions and operation and maintenance services, including for projects constructed by third parties.
Reliance New Energy Solar Ltd will acquire the stake in Sterling and Wilson Solar through a combination of preferential allotment, share sale by the Shapoorji Pallonji and Company Private Limited (one of the current promoters of Sterling and Wilson Solar), and an open offer.
The agreement includes a preferential allotment of 2.93 crore equity shares (equivalent to 15.46% post preferential share capital) for INR 375.00 per share, aggregating to INR 1,098.75 crore. It also includes the acquisition of 1.84 crore equity shares from Shapoorji Pallonji and Company Private Limited (equivalent to 9.70% post preferential share capital) at a price of INR 375.0 per share, aggregating to INR 690 crore. Further, Reliance New Energy Solar will make a public announcement to the public shareholders of SWSL to acquire up to 4.91 crore equity shares of SWSL, representing 25.9%.
Reliance New Energy Solar Ltd (RNESL), a wholly owned subsidiary of Reliance Industries Ltd (RIL), had earlier announced acquisition of 100% shareholding of REC Solar Holdings AS (REC Group) from China National Bluestar (Group) Co Ltd., for an Enterprise Value of USD 771 million.
The route of acquisition based on news online is Reliance New Energy Solar will hold 40.0% of the equity capital of SWSL, consequent to acquisition in the open offer, follow-on acquisition of shares from SPCPL and Khurshed Daruvala, and sell down, if any required.
Preferential allotments provide a backdoor route for promoters to significantly hike their stakes. The market participants allege manipulation here. They aver that often preferential offer of convertible warrants is made to an operator, who pays the requisite 10% money upfront, only to recover it at a later stage from the promoter and thereby, incurring no risk or loss.
Preference shares, which are issued by companies seeking to raise capital, combine the characteristics of debt and equity investments, and are consequently considered to be hybrid securities.
About Sterling and Wilson
Sterling and Wilson Solar has executed over 11 GW of solar turnkey projects globally. The company has a 3,000 strong team and presence across 24 countries. It provides a comprehensive range of solar energy turnkey solutions including design, procurement, construction, project management, and operations and management.
Partnership with Sterling and Wilson Solar provides Reliance access to Sterling and Wilson’s engineering and project management skills and complement Reliance’s proven strengths in digital technology, engineering, and procurement and project execution as it aspires to become a global leader in green energy based on the latest and most cost-competitive technologies and development capabilities.
Combined with Reliance’s announced plans to set up four state-of-the-art Giga factories in Jamnagar, Gujarat, the partnership offers a fully integrated product with unrivaled engineering capabilities.
As reported in moneycontrol website, Saudi Aramco is reportedly looking to invest in Reliance New Energy Solar Limited after both firms had earlier announced the scrapping of $15 billion investment in Reliance’s oil-to-chemicals (O2C) business.
