Bloomberg News

Billionaire Ambani Said in Talks to Sell Road, Power Stakes

July 08, 2011

(Updates with investor’s comment in fourth paragraph.)

July 8 (Bloomberg) -- Billionaire Anil Ambani’s Reliance Infrastructure Ltd. is in talks to sell stakes in its power transmission business, road and subway projects, said two people with direct knowledge of the matter.

The Mumbai-based company’s board hasn’t taken a final decision on the sale, said one of the people, who declined to be identified because they’re not authorized to discuss the matter. Reliance Power Transmission Ltd. is a wholly-owned unit of Reliance Infrastructure, according to the company’s website.

The Reliance Anil Dhirubhai Ambani Group, which controls Reliance Infrastructure, is selling stakes in assets to pare debt in companies including its flagship Reliance Communications Ltd. The mobile-phone company, which has 320 billion rupees ($7.2 billion) of net debt, is in talks to sell its tower business, three people with knowledge of the matter said on June 7. Reliance Infrastructure has 166 billion rupees of debt, according to data compiled by Bloomberg.

“If they get tie-ups with foreign investors, it’s positive,” said K.K. Mital, fund manager with Globe Capital Market Ltd. in New Delhi. “It’s difficult to raise money for infrastructure projects in India.”

Reliance Infrastructure operates 11 road projects with an estimated total cost of 117 billion rupees, according to its website. The company’s unit is building 66.2 billion rupees of power transmission projects, according to the website.

Ravi Muthreja, a spokesman at the Mumbai-based company said the company doesn’t comment on “speculative news.”

Phone Towers, Insurance

Reliance Infrastructure’s shares, which have declined 29 percent this year, erased losses to advance 1.4 percent to 597.6 rupees at 12:53 p.m. in Mumbai. Reliance Communications has declined 32 percent this year making it the worst performing stock in the benchmark Sensex Index.

In a presentation to investors in May, Reliance Infrastructure said three of its road projects had started to generate revenue and seven more start this year.

Reliance Infrastructure will also consider bringing in investors for subway projects in Mumbai and New Delhi, one of the people said. It’s building the Mumbai Metro Line I project at an estimated cost of 25 billion rupees and the Mumbai Metro Line II, projected to cost 110 billion rupees, according to its website.

The company has also built the 24.5-billion rupee Delhi Airport Metro Express Link project. Reliance Infrastructure holds a 95 percent stake in Delhi Airport Express Link Ltd. and owns 69 percent of Mumbai Metro Line I and 49 percent of Mumbai Metro Line II.

Highway Projects

India will award 550 billion rupees of highway construction projects this year, J.N. Singh, finance chief of National Highways Authority of India, said this week. The 7,300 kilometer (4,536 miles) project includes new expressways as well as widening of existing roads through the year ending March 31.

Reliance Communications is in talks with TPG Capital, Carlyle Group, Blackstone Group LP and Apax Partners LLP to sell its Reliance Infratel tower business, the people said.

Nippon Life Insurance Co., Japan’s biggest life insurer, agreed to buy a 26 percent stake in Reliance Life Insurance Co. for 30.6 billion rupees, according to a joint statement from the companies on March 14.

--Editors: Philip Lagerkranser, Arijit Ghosh.

To contact the reporters on this story: George Smith Alexander in Mumbai galexander11@bloomberg.net. Archana Chaudhary in New Delhi at achaudhary2@bloomberg.net

To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net


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