Shares of Adani Power were slightly up after it announced that Mahan Energen Limited (MEL) has ceased to be its wholly-owned subsidiary, with Reliance Industries subscribing to its shares.
What Happened: Reliance Industries has subscribed to 5 crore Class ‘B' equity shares of Mahan Energen at a face value of ₹10 each, the company said in a press release on Tuesday. This translates into a 26% stake in the Adani subsidiary, which Reliance had acquired in March.
Upon the completion of the required conditions, the two companies have entered into a 20-year power purchase agreement for 500 megawatts.
In a first, Mukesh Ambani and Gautam Adani, the two industry stalwarts, have entered an investment agreement to sell electricity under a 20-year deal.
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According to the agreement, a 600-megawatt unit from MEL’s Mahan thermal power plant, which has a total operating and planned capacity of 2800 megawatts, will be assigned as the Captive Unit for this purpose.
"This allotment will enable RIL (Reliance Industries Limited) to source reliable power supply from the Captive Unit under the exclusive arrangement between the two corporates and demonstrate the advantage of this mutually beneficial arrangement by enhancing MEL's long-term revenue visibility," Adani Power said in its release.
Price Action: Shares of both the firms were muted during mid-day trading on Wednesday. Adani Power was up 0.09% at ₹725.65 while Reliance was down 0.82% at ₹3,154.45.
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