Herbert Smith Freehills advised Anil Ambani led-Reliance Infrastructure as international counsel on its acquisition of, an ultimately, controlling stake in Pipavav Defence and Offshore Engineering Company.

The acquisition is said to be the largest ever acquisition in the Indian defence sector, which has recently opened up following Indian government policy changes allowing increased FDI in the sector but at the same time looking to fulfil Prime Minister of India Narendra Modi's "Make in India" programme.

Under the agreement, Reliance Infrastructure (through one of its three recently incorporated wholly owned defence subsidiaries, Reliance Defence Systems) has agreed to acquire approximately 18% of the shares in Pipavav from its promoters for approximately US$130 million. As a consequence, Reliance Defence Systems has issued an announcement to make a mandatory open offer to acquire up to 26% of the shares from the public shareholders of Pipavav for approximately US$200 million. The agreement further contemplates the acquisition of additional equity shares of Pipavav from its promoters to ensure that Reliance Infrastructure's shareholding is not less than 25.1% after the open offer.

Completion of the transaction is conditional on various conditions including certain regulatory approvals and agreement with Pipavav's creditors. Post completion, Anil Ambani will become the Chairman of Pipavav.

The Herbert Smith Freehills team was led by M&A, and client relationship, partner, Roddy Martin and senior associate Brian O'Malley with assistance from associate Sid Shukla. They were supported by tax partner, Howard Murray, and associate, Pindy Gainda, and the environmental team was led by Julie Vaughan.

Roddy Martin commented: "This is a fantastic result for Anil and Reliance Infra, making its first, but very high profile, foray into the Indian defence sector and we were delighted to have been able to support the Reliance ADA Group on the transaction. This sector is an increasingly hot area, with high levels of interest both from established foreign defence companies as well as from India's large promoter led groups off the back of the 'Make in India' campaign. We are pleased to be at the forefront of M&A activity in this sector and, in conjunction with our specialist defence team led by Adrian Clough and Stephen Rayfield, are extremely well-placed for further procurement, joint-venture and M&A activity in the sector."

Reliance Infrastructure was also advised as to Indian law by JSA. Pipavav was advised by K Law (also known as Krishnamurthy & Co).