Reliance Jaiprakash Hydro Propsosed Acquisition Analysis.

Introduction
Reliance Power Limited is part of the Reliance Anil Dhirubhai Ambani Group. It was
established to develop, construct and operate power projects in the Indian and international
markets.
With its subsidiaries, it is developing 13 medium and large-sized power projects with a
combined planned installed capacity of 33,480 MW.
Reliance Natural Resources merged with Reliance Power in 2010, shortly after its initial
public offering.[1] In July 2014, Reliance Power acquired the entire 1,800 MW hydropower
portfolio of Jaiprakash Associates for over 10,000 crore.
The company was incorporated in January 1995 as Bawana Power Private Limited and
changed its name to Reliance Delhi Power Private Limited in February 1995. Its name was
changed to Reliance Energy Generation Limited in March 2004, and finally to Reliance
Power Limited in July 2007.[4]
The company website identifies project sites broadly to be located in western India (12,220
MW), northern India (9,080 MW) and northeastern India (4,220 MW) and southern
India(4,000 MW). They include six coal-fired projects (14,620 MW) to be fuelled by reserves
from captive mines and supplies from India and abroad, two gas-fired projects (10,280 MW)
to be fuelled primarily by reserves from the Krishna Godavari basin (the "KG Basin") off the
east coast of India, and four hydroelectric projects (3,300 MW), three of them in Arunachal
Pradesh and one in Uttarakhand.
Jaiprakash Hydro Power incorporated on December 21, 1994 with the object, inter alia, to set
up hydro-electric or Thermal power projects and for the supply of general electric power.
This was funded through equity participation by JAL. In 2009 the name of the Company i.e.
Jaiprakash Hydro-Power Ltd. was changed to Jaiprakash Power Ventures Ltd.

JPVLs hydroelectric power portfolio has an aggregate capacity of nearly 1,800 MW, fully in
operation, the largest in the private sector in India, and with an asset base of over Rs 10,000
crore.
The portfolio comprises of the three plants, with an asset life of over 50 years, each using
run-of-the-river technology to convert natural water flow to electricity, eliminating the need
for a large reservoir.
Objective
In the case of Jaiprakash Associates, a high debt had made asset sale necessary. JP
Power seems to be benefiting more from the deal, since it will be getting much-needed cash
in its hands. Jaypee Group intends to utilise the entire proceeds of the proposed transaction to
reduce its outstanding debt and thereby deleverage its consolidated balance sheet. A Barclays
report on the deal says that while the deal should help JP meet its debt obligation and finance
its projects under implementation, the actual impact will be a function of the deal price,
which has not yet been announced,
As the end of FY14, theJaiprakash Associates had a debt of Rs 61000 crore and a debt-toequity ratio of 5.9. The hydro-power assets were the marquee assets of the Jaiprakash Power
Ventures, which is the subsidiary of Jaiprakash Associates. After the sale, JP associates
through its subsidiary Jaiprakash power ventures will be left with only one operating power
plant. Its two under-construction power plants of total 3300 MW capacity is expected to be
commissioned in the next one year.
The high debt has been a drag on thestocks the group. The asset sale will reduce nearly Rs
7000 crore of debt. The proceeds of the asset sale can be used for equity infusion for its
under-construction projects.
In case of RPL, the hydropower plants are operational assets and will help increase Reliance
Powers cash flow. The deal, which is estimated to be around Rs 12,000 crore, is in line with
the total project cost of these hydro power assets. Given the fact that these are operational
assets, it appears a good deal for Reliance power.The company may not have may issue in
raising capital for the acquisition. It is estimated that the equity requirement for the deal will
be around Rs 2500 - 3000 crore. At the end of FY14, Reliance Power had a debt-to-equity
ratio of 1.4, which is better than the industry average.

The completion of the proposed transaction would make Reliance Power the largest provider
of hydroelectric power in the private sector in India.
Currently, Reliance Power has hydroelectric power projects aggregating over 5,000 MW
under development, of which 4,200 MW are located in Arunachal Pradesh, 700 MW in
Himachal Pradesh and 400 MW in Uttarakhand.
SBI Capital Markets Ltd are acting as advisors for the proposed Transaction.

Deal Value :
Reliance Power acquired the 1,800 MW hydroelectric power assets of Jaypee Group worth
over Rs 10,000 crore. The sale comes within days of Abu Dhabi National Energy Co.
withdrawing from buying two plants from the Jaypee Group.
Reliance CleanGen Ltd (RCL), a 100 per cent subsidiary of Reliance Power Ltd, and
Jaiprakash Power Ventures Ltd (JPVL), a subsidiary of Jaiprakash Associates Ltd (JAL),
signed an MOU for the 100 per cent acquisition by RCL of the entire hydroelectric power
portfolio of JPVL.
As per the press release, JPVLs portfolio consists of three plants, with an asset life of over 50
years, each using run-of-the-river technology to convert natural water flow to electricity,
eliminating the need for a large reservoir. These plants include the 300 MW Baspa stage-two
plant in Kinnaur in Himachal Pradesh, the 400 MW Vishnuprayag plant Chamoli District in
Uttarakhand and the 1,091 MW Karcham Wangtoo plant in Himachal Pradesh.
Reliance Power has its own hydro-electric power projects aggregating over 5,000 MW under
various stages of development.
Reliance Power will become one of the largest providers of hydroelectric power in India's
private sector, with 7,800 MW operating capacity by the end of FY15, if the deal goes
through.
As per latest updates, the proposed acquisition is delayed due to regulatory uncertainties over
tariff issues related to 1,000 MW Karcham Wangtoo hydro project -- one of the three

projects being sold.