Reliance sprung another surprise on October 10, 2021 (Sunday) when it announced two strategic investments into it’s newly identified focus area – Solar Power.
- In the afternoon – 100% acquisition of REC Solar Holdings for an enterprise value of $771 million (Rs 5,800 crore) from China National Bluestar (Group) Co Ltd; and
- In the evening – acquisition of upto 51% stake in Sterling & Wilson Solar (SWS) – a Shapoorji Pallonji Group Company at an investment of Rs 3,633 crore through a combination of preferential allotment, promoter stake sale and open offer. Though Reliance plans to acquire 51%, it comprises of 26% of open offer. Any shortfall of open offer will be made good by the promoters so as to ensure minimum of 40% stake to Reliance (post preferential allotment). However, as the price is fixed at Rs 375 for all the tranches, unlikely that open offer will be a success (current share price is Rs 460). Reliance therefore will in first stage end up holding about 40% at a total investment of Rs 2,850 crore – unless the promoter group decides to sell more.
Both investments are routed through Reliance New Energy Solar Ltd (RNESL), the wholly owned subsidiary of Reliance Industries.
Key points to note:
- REC is headquartered in Norway, has operational headquarters in Singapore and regional hubs in North America, Europe, Australia, and Asia-Pacific. The 25-year-old company is world’s leading solar cells/ panels and polysilicon manufacturer. It has three manufacturing facilities – two in Norway for making solar grade polysilicon and one in Singapore making PV cells and modules.
- REC provides Reliance access to a global operating platform in the solar business and also the technology access to set up it’s own proposed manufacturing facilities (of metallic silicon and solar panels) at Jamnagar.
- SWS on the other hand is a EPC contractor in solar business operating globally with employees across 24 countries.
- This acquisition adds the project execution experience to Reliance’s solar plans.
Both investments seem steps in the right direction and provide Reliance a great start towards it’s solar dreams.