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RIL Unit to buy 40% of Sterling and Wilson via preferential allotment, secondary purchase

Reliance New Energy Solar Ltd (RNESL), a unit of Reliance Industries Ltd (RIL), on October 10 said it will acquire 40 percent of Sterling & Wilson Solar Ltd (SWSL) in a deal underscoring the company's clean energy ambitions.

October 10, 2021 / 10:47 PM IST
Mukesh Ambani. (PC-MoneyControl)

Mukesh Ambani. (PC-MoneyControl)


Reliance New Energy Solar Ltd (RNESL), a unit of Reliance Industries Ltd (RIL), on October 10 said it will acquire 40 per cent of Sterling and Wilson Solar Ltd (SWSL) in a deal underscoring the company's clean-energy ambitions.

RNESL will buy a stake in Sterling and Wilson Solar, a leading solar engineering, procurement and constructions solutions provider, through a combination of primary investment, secondary purchase and open offer, RIL said in a statement.
In the first leg of the deal, RNESL will acquire a 15.46 percent stake in Sterling & Wilson Solar at Rs 375 per share, or roughly Rs 1,100 crore. In the second leg, Shapoorji Pallonji and Khurshed Daruvala, the promoters of Sterling and Wilson, will sell 1.84 crore shares (around 9.7 percent equity) to RNESL at the same price of Rs 375 per share. This will require the Reliance unit to make an open offer to public shareholders for an additional 25.9 percent stake. 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 make good the difference.


Shares of Sterling and Wilson closed at Rs 434.8, up 7.3 percent from the previous close, at the Bombay Stock Exchange on Friday.


Daruvala will continue to be chairman of the board and lead the next phase of growth for SWSL, said a statement.

Sterling and Wilson Solar services largely utility-scale power projects and has a global portfolio with a total capacity of 11.4 GWp, including  the world’s largest single-location power plant in Abu Dhabi. It also does O&M for projects totaling 8.8 GWp.

In September, the company had announced that it has given the go-ahead for 66 MWp solar power plant in Jordan. The Al Husainiyah project is expected to reduce carbon emissions by 50,000 tonnes.  At its June quarter results announcement, the management had stated that it expects clients to award more contracts in the December quarter.

Earlier today, RNESL announced the acquisition of REC Solar Holdings, a Norwegian solar panel maker, for an enterprise value of $771 million from China National Bluestar (Group) Co Ltd. In June, RIL said it would invest $10.1 billion in clean energy over three years.

The two acquisitions are in line with RIL's target of generating 100GW annually by 2030, towards Prime Minister Narendra Modi’s vision to generate 450GW of renewable energy by the same year.

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The energy giant is transforming its oil-to-gas and oil-to-chemicals business in line with its new energy and new materials vision.

New vision

At its June AGM, the conglomerate’s chairman and managing director (CMD) Mukesh Ambani had outlined their plan for their new energy business--first through hyper-integration, of scientific knowledge and technological innovation; second by building a business model that catches the upward curve in demand for clean energy and downward curve in cost of production; and third by working on improving efficiency of assets and operations.

In line with this, the CMD announced plans to invest Rs 75,000 crore (Rs $10 billion) over the next three years in renewable energy, including the setting up of gigafactories in Jamnagar, Gujarat; Jamanagar is from where RIL’s old-energy business was launched and it will be from where its new-energy business will be too. The gigafactories will be part of a 5,000-acre, integrated complex called Dhirubhai Ambani Green Energy Giga Complex that will produce various kinds of renewable energy. After this announcement, brokerage firm Bernstein estimated that RIL may have a $36-billion clean-energy business in the next five years.

The Jamnagar complex is expected to have an integrated solar photovoltaic module factory for the production of solar energy, an advanced energy storage battery factory for the storage of intermittent energy, an electrolyser factory to produce green hydrogen and a fuel-cell factory to convert hydrogen into motive and stationery power. It will house infrastructure to manufacture ancillary material and equipment for the gigafactories.

RIL will also add two divisions to collaborate with clean-energy plants across the world and to finance stakeholders in the ecosystem. The first, called the Renewable Energy Project Management and Construction Division, will help green MSME entrepreneurs deploy kilowatt to megawatt-scale solutions and the second called the Renewable Energy Project Finance Division will provide finance solutions by creating a platform to source long-term capital for these investments by approaching banks and global green funds.

AZB and K Law acted as legal advisors, Ernst and Young as the accounting and tax diligence advisor and Edelweiss as the financial advisor to Reliance.

DAM Capital acted as financial advisor and Desai & Diwanji acted as legal advisor to SWSL and the selling shareholders.

Disclosure: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.
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