Canadian Fund Still Weighing Reliance Infra Deal After Deadline

  • Initial exclusivity agreement was to run through March 31
  • Billionaire Ambani seeking to pare debt through asset sales

Public Sector Pension Investment Board, one of the largest Canadian pension funds, is still considering buying a stake in Reliance Infrastructure Ltd.’s Mumbai power business after the initial deadline for a formal agreement passed.

The Canadian fund “is still evaluating this investment opportunity,” spokeswoman Anne-Marie Durand said in an e-mailed response to Bloomberg. Reliance Infrastructure, backed by Indian billionaire Anil Ambani, signed a non-binding term sheet and entered exclusive talks with PSP through March 31 on the sale of 49 percent of its Mumbai power generation, transmission and distribution business, according to a November exchange filing.

Reliance Infrastructure had initially been seeking as much as 40 billion rupees ($601 million) for the stake, a person with knowledge of the matter said. It had also been considering transferring about 70 billion rupees of related liabilities to the new entity holding the Mumbai business, two people said, asking not to be named as the information is private.

Slow progress at achieving asset sales has hampered Ambani’s efforts to pare debt at his companies as he seeks to expand in defense manufacturing. Reliance Communications Ltd., a telecommunications operator controlled by the billionaire, faces higher financing costs ahead of repayment deadlines in coming months, following delays in selling its wireless tower and fiber-optic assets.

Any deal for the Reliance Infrastructure operations would be the first major foreign investment in Indian power distribution. The company, which has a market value of about $2 billion, agreed to sell its cement business to Birla Corp. in February and said last year it’s exploring options for its road projects.

Montreal-based Public Sector Pension, known as PSP Investments, has C$112 billion ($87 billion) in assets under management and oversees the retirements savings of public servants, the Canadian Forces, and the Royal Canadian Mounted Police. PSP’s Durand declined to comment on whether the exclusivity period had been extended or why a formal deal hadn’t yet been reached. A representative for Reliance Infrastructure didn’t reply to an e-mailed query seeking comment.

Reliance Infrastructure shares have risen 32 percent since the last trading day before the PSP discussions were announced on Nov. 16. The benchmark S&P BSE Sensex declined 1.6 percent over the same period.

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