Private equity firms Actis Llp and Brookfield Asset Management Inc. have emerged among the front runners for acquiring a majority stake in Finland’s state-controlled power utility Fortum Oyj’s 500 megawatt (MW) Indian solar projects, said two people aware of the development.
The stake sale deal by the third-largest Nordic utility, potentially valued at about Euro 500 million, is set to rank among the largest in India’s green energy space, with Kotak Investment Banking running the sale process.
Despite the coronavirus pandemic, deal activity continues unabated in India’ green energy space. Recently the single-largest foreign clean energy investment announcement in India was made by Japan’s ORIX Corp. for $980 million in Greenko for a 17% stake.
Also, the stake sale by one of the largest nuclear and hydropower generators in Europe and Russia comes at a time when India expects its solar power tariff of coming down to sub ₹2 per unit level, after touching a record low of ₹2 per kilowatt- hour in a bid conducted by Solar Energy Corporation of India (SECI) last month.
Sanjay Aggarwal, managing director, Fortum India Pvt. Ltd. declined comment.
These projects for stake sale are to be brought under a new platform wherein the new investor will put in a significant equity contribution. This new platform co-funded by Fortum is expected to develop around 500 MW every year in India and overseas.
Spokespersons for Actis Llp and Brookfield Asset Management Inc. declined comment.
Queries emailed to a Kotak Investment Banking spokesperson on late Wednesday evening remained unanswered.
The stake sale is part of Fortum’ strategy and its investment thesis of taking the early risks and monetising the projects later to raise capital to invest in future projects. As part of this strategy, in June 2018, Fortum agreed to sell a 54% stake in 185 MW solar projects in India to UK Climate Investments (40%) and Elite Alfred Berg (14%).
Mint earlier reported about Actis Llp and Brookfield Asset Management Inc. among firm such as Canada Pension Plan Investment Board (CPPIB), KKR, Macquarie Group, Edelweiss Infrastructure Yield Plus Fund and O2 Power separately evinced interest in acquiring the same state.
The deal activity in India’ green energy space has picked up pace. A case in point being India’s largest power generation utility NTPC Ltd working on the acquisition of at least 1 gigawatts (GW) of operational solar power projects from promoters, lenders, or merchant bankers. It also plans to acquire another 1GW of operational wind power projects.
The country is seeking additional clean energy investment of around $80 billion till 2022, growing more than threefold to $250 billion during 2023-30.
India’s green economy has attracted a bevy of investors ranging from private equity funds, pension funds, strategic players among others. Recently private equity firm KKR announced the launch of its renewable energy platform—Virescent Infrastructure—to acquire green energy assets in India. Other potential deals and transactions in the works as reported by Mint include; Warburg Pincus Llc exploring the sale of its stake in rooftop solar power company Cleanmax, Hyderabad-based green energy producer Mytrah Energy India Pvt. Ltd restarting the majority stake sale process in the firm, and Goldman Sachs backed ReNew Power Ventures Pvt. Ltd exploring an overseas listing.
Also, Acme Solar looking to sell 4.84 GW of solar projects; Petronas is looking to acquire around 10% stake in Tata Power Renewable Energy Ltd, in addition to investing in Tata Power’ renewable energy InvIT, and Avaada Energy has mandated Bank of America (BofA) for selling stake.
In addition; O2 Power and Ayana Renewable Power have emerged as the front-runners to acquire Azure Power’ 305 MW solar assets; Canada Pension Plan Investment Board is looking to buy Japan’s SoftBank Group Corp’s stake in SB Energy Holding and EverSource Capital’ plans to buy out the entire 167 MW solar rooftop portfolio of NYSE-listed Azure Power Global.
Fortum is present in electricity, heating and cooling businesses in Nordic and Baltic countries, Russia and Poland. Fortum India’s operation has around 700 MW in its solar power project portfolio. Apart from solar, Fortum’s India playbook is focussing on a bio-ethanol plant at Numaligarh refinery, waste to energy, and charging stations for electric-vehicles.
Source: Mint
