Reliance Infrastructure Ltd (RInfra) has signed a non-binding term sheet with the Public Sector Pension Investment Board (PSP Investments), one of the largest pension fund managers in Canada (C$112 billion of net assets under its management).

The agreement is in relation to the acquisition by PSP Investments of 49 per cent equity stake in the company’s integrated power generation, transmission and distribution business in Mumbai and adjoining areas.

The generation, transmission, and distribution assets of Mumbai power are to be carved out into a separate SPV that will be named Reliance Energy. RInfra will own the controlling 51 per cent stake in it, and PSP Investments will own 49 per cent, RInfra said in a statement to the BSE.

RInfra will utilise the proceeds of the stake sale to reduce debt.

The parties have entered into an exclusivity agreement valid till March 31, 2016. The proposed transaction is subject to due diligence, documentation, applicable regulatory and other approvals and certain other conditions. Accordingly, there can be no certainty that a transaction will result, and further announcements will be made at the appropriate stage, the statement added.

RInfra’s Mumbai power business distributes power to nearly 3 million residential, industrial and commercial consumers in the suburbs of Mumbai, covering an area of 400 sq km, and catering to a peak demand of over 1,800 MW and revenues of Rs 7,700 crore in FY 2015.

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