Reliance Industries Ltd’s wholly-owned subsidiary, Reliance New Energy Solar Ltd. (RNESL) has signed a definitive agreement to acquire 40% stake in Sterling & Wilson Solar (SWSL) for a total payout of approximately ₹ 2,845 crore.
Reliance New Energy Solar Ltd. has signed the agreement with Shapoorji Pallonji and Company Private Ltd (SPCPL), Mr. Khurshed Daruvala, Chairman of SWSL and Sterling & Wilson Solar Ltd.
About Sterling & Wilson Solar Ltd.
Sterling & Wilson Solar Ltd., a Shapoorji Pallonji Group company, is one of the largest solar engineering, procurement, construction (EPC), and operation and maintenance solution providers globally and has more than 5 decades of engineering experience.
Sterling & Wilson Solar Ltd. has presence in more than 24 countries and has more than 11 GW of solar power projects in its basket, which incudes commissioned plants and projects under various stages of construction.
Details of Reliance’s Stake Purchase in Sterling & Wilson Solar
As explained in the press release of RIL dated 10th October 2021, the buyout of 40% stake is through a combination of primary investment and secondary purchase, for approximately a total expenditure of ₹ 2,845 crores.
The deal involves preferential allotment of 2.93 crore equity shares, which is equivalent to 15.46% post preferential share capital at a price of ₹ 375.0 per share.
Then 1.84 crore equity shares will be acquired by Reliance New Energy Solar Ltd. from Shapoorji Pallonji & Company at a price of ₹ 375.0 per share, which is equivalent to 9.70% post preferential share capital.
This will be followed by an open offer by Reliance New Energy Solar Ltd. to the public shareholders of Sterling & Wilson Solar Ltd. for acquiring up to 4.91 crore equity shares of SWSL. This shall represent upto 25.9% (the entire public holding) in Sterling & Wilson Solar.
Reliance New Energy Solar will hold 40 % of the equity capital of Sterling & Wilson Solar Ltd. In case, the open offer fails to push RNESL’s total stake to 40 percent, Shapoorji Pallonji and Daruvala will sell more of their shares to dissolve the difference. Reliance Industries mentioned in a release “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 Khurshed Daruvala, and sell down, if any required“.
Also, as per the deal, Mr. Khurshed Daruvala will continue to be Chairman of the Board and lead the next phase of growth for SWSL.
Stake Sale in Sterling & Wilson Solar to Help Shapoorji Pallonji Group’s Restructuring Plan
The Shapoorji Pallonji Group defaulted on bank loans and has been facing a liquidity crisis. At present Shapoorji Pallonji Group’s total debt is at Rs. 20,000 Crore.
Selling a 40% stake in Sterling & Wilson Solar (SWSL) is part of the one-time debt restructuring plan of Shapoorji Pallonji Group.
This is the second disinvestment by the Shapoorji Pallonji Group within a month.
Recently, Eureka Forbes Limited (EFL), a subsidiary of Shapoorji Pallonji Group signed a definitive agreement with Advent International, a global private equity firm to acquire a majority stake at an enterprise value of ₹ 4,400 crores.
Why did Reliance Showcase Interest in Sterling & Wilson Solar
This acquisition will help Reliance make inroads into the Middle East markets where Sterling & Wilson Solar has a strong presence.
This investment by Reliance is in line with its plan of investing in new, advanced technologies and operating capabilities aimed at achieving 100 GW clean and green energy goal before the end of this decade and to become a global player in the Renewable Energy Industry. Recently, Reliance also acquired REC Solar Holdings for $771 million.