Anil Ambani-led Reliance Infrastructure ha sold its Mumbai power business to Adani Transmission for a total consideration of Rs 18,800 crore. An agreement for this was signed on Thursday.

Reliance Infrastructure (RInfra) announced the signing of a definitive binding agreement with Adani Transmission (ATL) for a 100 per cent stake sale of its Mumbai power business, which includes integrated business of generation, transmission and distribution of power, Reliance Infrastructure said in a BSE filing.

Adani Transmission Ltd, the power distribution arm of Adani Enterprises, will pay an initial Rs 13,251 crore for Reliance’s Mumbai power business and Rs 5,550 crore at a later date based on certain approvals, the Reliance statement said. The company said the total consideration is estimated at Rs 18,800 crore. The proposed transaction is subject to customary approvals.

RInfra will utilise the entire proceeds of this transformative transaction to reduce its debt, becoming debt free and garnering up to Rs 3,000 crore as cash surplus. Gautam Adani, Chairman of the Adani Group, said: “The acquisition marks our foray into the distribution sector in India. We see distribution as the next sunrise sector as India embarks on its mission to achieve 24×7 power for all.”

He further said, “We see a massive growth opportunity and will look at both organic and inorganic opportunities to build a market leading distribution company.” With this acquisition, Adani Transmission will enjoy benefit of scale and of being an integrated distribution and transmission business in India. The company claimed that this is the largest ever debt reduction exercise by any corporate, saying this monetisation is a major step in RInfra’s deleveraging strategy for future growth.

Reliance Infrastructure’s Mumbai power business, known as Reliance Energy, is India’s largest private integrated power utility, distributing power to nearly 3 million residential, industrial and commercial consumers in the Mumbai suburbs covering 400 sq km. RInfra had bought Mumbai power business from Bombay Suburban Electric Supply in 2002. It caters to a peak demand of over 1,800 mw, with annual revenues of Rs 7,500 crore with stable cash flows.

Going forward, RInfra will focus on upcoming opportunities in the defence manufacturing business as well as in its engineering, procurement and construction businesses. Reliance Infrastructure posted a net profit of Rs 544 crore and reported total debt of around Rs 14,000 crore.