Effectively, shareholders of Reliance Power will get 4 shares of RNRL for every share of Rel Power held by them and the exchange ratio was based on an independent valuation made by KPMG.

With this RNRL will cease to be a shell company and shall merge into Rel Power. Currently, both together command a market capitalisation of Rs 50,000 crore or $11 billion. RNRL shareholders, including promoters, would get Reliance Power shares worth about Rs 7,150 crore, as per current market prices. Out of these, promoters would get shares worth over Rs 3,600 crore.

RNRL shareholders are expected to benefit from Reliance Power’s diversified generation portfolio of 37,000 MW and substantial coal reserves.  Significantly, RNRL shareholders who account for 80 per cent of its capital are also shareholders of Reliance Power.  Over 80 per cent of RNRL shareholders received their shares free on demerger from RIL. Post merger, Reliance Power will have over 6 million shareholders, one of the world’s largest shareholding family. The combined entity would have net worth of over Rs 16,000 crore, including RNRL’s net worth of around Rs 1,900, it said. The merger would be subject to approvals of Bombay High Court and other regulatory authorities, it added.

RNRL was born out of the demerger of Dhriubhai Ambani’s Reliance empire and its main purpose sourcing, supply and transportation of fuels, primarily natural gas.   

RNRL was to source natural gas from Reliance Industries and trade it to ADAG power plants including the proposed mega 7,800-MW Dadri unit being set up by Rel Power.  However, Supreme Court decision on May 7  upholding the Centre’s policy on pricing and utilisation of natural gas, left no role for RNRL in supply of gas to Rel Power.  The Sunday board decision was akin bailing out RNRL since Gas Utilisation Policy clearly spells out that trading or profiteering from natural gas sales is not allowed.