Adani to demerge ports, power, transmission and mining businesses

Aims at unlocking value for the shareholders of AEL

A technician repairs power supply lines at a power plant of Adani Power at Mundra Port in the western Indian state of Gujarat April 2, 2014. The way billionaire Indian infrastructure-builder Gautam Adani sees it, working with the government does not make him a crony-capitalist. Adani's rapid ascent to the top tier of Indian business is often associated with the rise of Narendra Modi, the Hindu nationalist opposition leader widely expected to become India's next prime minister once the country's election ends next month. Its flagship Adani Enterprises soared 22.9 percent for its biggest daily gain on Thursday and has nearly doubled since the start of February, compared with a nearly 20 percent gain in the infrastructure index. Picture taken April 2, 2014. REUTERS/Amit Dave (INDIA - Tags: ENERGY BUSINESS POLITICS ELECTIONS)

Adani Enterprises Ltd (AEL), the holding company of the Adani group, on Friday, announced a complex restructuring exercise to simplify its corporate structure.

AEL, together with its subsidiaries Adani Ports and Special Economic Zone Ltd (APSEZ) and Adani Power Ltd (APL), announced a composite scheme of arrangement for demerger of the port undertaking of AEL into APSEZ and demerger of the power undertaking of AEL into APL.

The scheme also involves the demerger of the transmission undertaking of AEL into Adani Transmissions Ltd (ATL), a wholly-owned subsidiary of AEL and the resulting listing of ATL. Further, Adani Mining Private Ltd (AMPL), a wholly-owned subsidiary of AEL will be merged into AEL. The appointed date has been fixed at April 1. “The scheme of arrangement will simplify corporate structure providing the shareholders of AEL direct shareholding in the respective operating companies, listing of one of the largest private sector transmission companies with over 5,000 circuit km of transmission lines across western, northern and central India and increase free float at APL and APSEZ,” AEL said in a statement.

The transaction is expected to unlock value for the shareholders of AEL by eliminating holding company discount, it added.

Demerger ratio After the demerger of the port undertaking, APSEZ will allot new equity shares to the equity shareholders of AEL in the ratio of 14,123 equity shares in APSEZ for every 10,000 equity shares held by the shareholder in AEL. The shares held by AEL in APSEZ will be cancelled. Following the demerger of the power undertaking, APL will allot new shares to the shareholders of AEL in the ratio of 18,596 shares in APL for every 10,000 shares held by the shareholder in AEL. The shares held by AEL in APL will be cancelled.

As a result of demerger of the transmission undertaking, ATL will allot new equity shares to the shareholders of AEL in the ratio of one share in ATL for every one share held by the equity shareholder in AEL.

The shares held by AEL in ATL will be cancelled. ATL will be listed.

AMPL will be merged into AEL and no equity shares will be issued post-merger as AMPL is a wholly-owned subsidiary of AEL. The transactions under the scheme are expected to close by December 31. The respective boards have approved the proposal.