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Canadian investor Brookfield announced on Thursday that it is set to acquire Mukesh Ambani privately owned East-West Pipeline limited with an overall valuation of Rs 13,000 crore ($2 billion) earlier known as Reliance Gas Transportation Infrastructure.
India investment trust, sponsored by Canadian investor Brookfield will acquire 100 percent equity interest in Pipeline limited. This will be the first time a private pipeline in India is being monetized.
It's also the first time Reliance, India's largest private sector company. Brookfield is also buying Reliance Jio’s telecom tower assets in a similarly structured transaction that could value the portfolio at $7-8 billion, said sources aware of the developments.
Brookfield has already filed the preliminary placement memorandum for setting up an infrastructure investment trust ( InvIT). Brookfield will be the sponsor or this India Infrastructure Trust and will own 90% of it.
The InvIT will acquire 100% equity interest in Pipeline Infrastructure Private Limited (“PIPL”) which currently owns and operates the Pipeline.
Based on the understanding, the existing pipeline usage agreement has been reworked, giving significant participation in net earnings of PIPL to RIL.
“As part of the transaction, InvIT will acquire 100 percent equity in PIPL, which currently owns and operates the pipeline," said a RIL statement.
The 1,400-km pipeline, owned by Mukesh Ambani’s holding companies, connects Kakinada on the Andhra coast to Bharuch in Gujarat, had run into losses owing to a drop in natural gas production in Reliance Industries (RIL) blocks in the Krishna-Godavari basin.
Following the production drop, the pipeline was reportedly running at nearly 5 percent of its capacity to transport 80 mmscmd (million standard cubic meters a day) of natural gas.
EWPL has built and operated the critical pipeline to transport natural gas produced by Reliance-BP from the Krishna-Godavari (KG) basin on the east coast and links to users on the west coast.