Adani to hive off power, ports businesses in restructuring

Infrastructure major Adani Group today announced a major restructuring, including demerger of port and power undertakings of flagship Adani Enterprises Ltd (AEL), with a view to streamline its various businesses.

The move is designed to make it easier for the group to expand its mining, ports and power operations.

Adani, India's largest private port operator and its biggest thermal power producer after a series of acquisitions over the last year from rivals, said the restructuring, which will take effect from 1 April 2015, will be subject to various approvals.

The board of directors of AEL, on Friday, unanimously approved the scheme of demerger of the diversified businesses of the flagship company together with its subsidiaries Adani Ports and Special Economic Zone Ltd (APSEZL) and Adani Power Ltd (APL), a company release said today.

The composite scheme of arrangement for the demerger of AEL's port undertaking into APSEZL and that of power undertaking into APL also involves demerger of the flagship's transmission undertaking into Adani Transmissions Ltd (ATL), a wholly owned subsidiary of AEL, and the resulting listing of ATL on the BSE and NSE.

Further, Adani Mining Pvt Ltd (AMPL), another wholly owned subsidiary of AEL, is proposed to be merged into AEL.

The scheme of arrangement will simplify the corporate structure providing shareholders of AEL direct shareholding in the respective companies as also listing of one of the largest private sector transmission companies (ATL) with over 5,000 circuit km of transmission lines across western, northern and central Indian states and increase the free float at APL and APSEZL.

This transaction is expected to unlock value for the shareholders of AEL by eliminating holding company discount.

''The boards, including the independent directors of AEL, APSEZ and APL, approved the proposed scheme and recommended the same in the interest of their respective shareholders,'' the statement said.

The group had appointed BSR & Associates to advise the boards of AEL, APSEZ and APL on the 'Demerger Share Entitlement Ratio' (DSER) for consideration by the respective boards.

The board has received opinion from JM Financial Institutional Securities on the fairness of each of the DSER from a financial point of view. JM Financial was the lead financial and transaction advisor. Macquarie Capital was the advisor for the transaction.

Axis Capital Ltd provided advice on the fairness of the respective DSER from a financial point of view while Dhruva Advisors LLP and GK Choksey & Co advised on taxation and Singhi & Co provided legal advice.

The scheme of arrangement is subject to the necessary approvals from the BSE, NSE, SEBI, simple majority of the public shareholders of each of AEL, APL and APSEZL in terms of the applicable SEBI regulations, circulars and guidelines, and shareholders and creditors of each of these listed companies, besides the Gujarat High Court and such other regulatory and statutory approvals as may be required.