Värde Partners, a US-based alternative investor that specialises in credit and distressed assets investments, has signed an initial agreement to invest in Reliance Power Ltd.
Reliance Power, part of former billionaire Anil Ambani’s Reliance Group, said Monday the company and a subsidiary have entered into an indicative Memorandum of Understanding with Värde to avail debt of up to about Rs 1,200 crore ($150 million).
Shares of Mumbai-listed Reliance Power jumped by their maximum limit of 10% to touch Rs 23.30 apiece after the announcement.
The two companies plan to use the fresh capital for settlement and discharge and/or acquisition and restructuring of certain financial debt availed by Reliance Power.
Reliance Power said the drawdown of the debt will be subject to finalization and execution of binding documents and all requisite approvals, including regulatory approvals as per applicable rules and regulations.
Reliance Power operates power projects based on coal, gas, hydro and renewable energy, with an operating portfolio of 5,945 megawatts.
The company, which went public in February 2008 after raising Rs 11,560 crore in what was India’s biggest Indian IPO at the time, has been struggling with high debt for the past few years—like other companies of Anil Ambani’s Reliance Group.
The proposed deal with Värde Partners is at least the second such transaction by a Reliance Group company. In June last year, Reliance Infrastructure said it planned to raise up to Rs 550 crore ($75.5 million then) from Värde Partners.
Värde Partners was founded in 1993 and manages more than $13 billion. It employs more than 300 professionals worldwide with offices in Minneapolis, New York, London, Singapore, Mumbai and other cities in Asia and Europe.
The firm, which mainly makes distressed debt investments, opened its office in Mumbai in 2018 and formed an asset reconstruction joint venture with Aditya Birla Capital Ltd in August 2018.
Värde’s other India transaction include a debt investment of Rs 440 crore in real estate developer Omaxe in April this year. It also provided $155 million as construction financing to two office assets of Phoenix Group in Hyderabad last year.
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