Reliance Infrastructure acquires Pipavav Defence

Reliance Infrastructure Ltd., formerly known as Reliance Energy and before that as Bombay Suburban Electric Supply is India’s largest private sector enterprise power utility. It is part of the Reliance Anil Dhirubhai Ambani Group, one of India’s largest conglomerates. The company is the sole distributor of electricity to consumers in the suburbs of Mumbai. It also runs power generation, transmission, and distribution businesses in other parts of Maharashtra, Goa, and Andhra Pradesh.

Reliance Infrastructure, through its subsidiary Reliance Defence Systems Pvt. Ltd., will acquire 130 Million equity shares from the promoters of Pipavav Defence at a price of Rs 63 per share. After the acquisition, Reliance Defence Systems will make an open offer to acquire an additional 26% stake in the company from public shareholders at Rs 66 per share. JM Financial Institutional Securities Ltd will be the sole financial advisor and the manager to the open offer.

Pipavav Defence is the India first world class integrated Defence production, ship building and offshore infrastructure company. It is the country’s first private sector company to get the license and contracts to build frontline warships for Indian Navy. It has one of the world’s largest infrastructure facilities. It is spreads over 841 acres of land on the Gujarat coast and has India’s largest and one of the world’s largest dry docks, measuring 662 meters in length and 65 meters in width.

India is one of the largest spenders on defence equipment. According to government estimates, the cumulative defence budget, consisting of capital and revenue expenditure, has increased 32% between fiscal 2011 and fiscal 2014 to Rs 2.04 Lakh crore. About 70% of India’s defence requirements are met through imports and the rest through local production by state owned companies.