With this, the Canadian firm will acquire 49 percent equity stake in Reliance Infrastructure's integrated power generation, transmission and distribution business in Mumbai and adjoining areas.

“The specified business is to be carved out on a going concern basis into a separate Special Purpose Vehicle, in which Reliance Infrastructure will own the controlling 51 percent stake and PSP Investments will own the rest 49 percent,” the company said in a statement.

Reliance Infrastructure's Mumbai power business (known as Reliance Energy) distributes power to nearly three million residential, industrial and commercial consumers in the suburbs of Mumbai, covering an area of 400 square km and catering to a peak demand of over 1,800 MW, with revenues of Rs.7,700 crore in the 2014-15.

The parties have entered into an Exclusivity Agreement valid till March 31, 2016. The proposed transaction is subject to due diligence, definitive documentation, applicable regulatory and other approvals and certain other conditions.

"Accordingly, there can be no certainty that a transaction will result. Further announcements will be made at an appropriate stage," the statement said.

As on March 31 this year, PSP Investments has Canadian USD112.0 billion of net assets under management.

Reliance Infrastructure has recently entered into the defense sector. It has also announced the proposed acquisition of Pipavav Defense and Offshore Engineering Co. Ltd. (PDOC), which houses India's largest dry dock facility to build warships and other naval vessels.

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