Welspun Renewables Energy Pvt. Ltd’s plan to sell its portfolio of 1.1 gigawatts (GW) of renewable power assets has attracted interest from several local and foreign power producers, according to two people aware of the development.
Tata Power Ltd and Hyderabad-based Greenko Group Plc have evinced interest in acquiring Welspun’s portfolio, said one of the two people cited above, requesting anonymity, as he is not authorized to speak with reporters. Singapore-based Sembcorp Industries Ltd is also interested, he added.
In February, Mint reported that IDFC Alternatives, the asset management arm of IDFC Ltd, was in talks to acquire the portfolio.
Welspun Renewables, a part of the $3 billion Welspun Group, has solar and wind power assets across eight states in India.
“At 1.1 GW, this is an attractive opportunity for any serious power producer to increase their renewable portfolio in India and that is why there is a good interest for acquiring these assets,” the first person said.
Welspun is seeking an enterprise valuation of Rs.9,500-10,000 crore for the assets, primarily solar power, said the second person cited above, also requesting anonymity.
“They are looking at a consideration of almost Rs.3,500 crore for the equity portion,” he said, adding that the portfolio of assets has a total debt of over Rs.6,000 crore,” he said.
Out of the portfolio of 1.1 GW, about 600 MW is currently operational and remaining 500MW is expected to become operational before the end of the year, this person added. Emails sent to Welspun Renewables on Friday went unanswered.
Tata Power declined to comment on the development except to say that it is evaluating various options.
In an emailed response, Sembcorp said that the company does not comment on specific opportunities. “India is one of Sembcorp’s key markets and an integral part of the company’s emerging market strategy. We are constantly on a lookout for suitable opportunities to grow our business in India, especially in the areas of thermal power, renewable power and urban development,” the firm said.
Sembcorp has more than 3,500 MW of power capacity in operation and under development in India, comprising 2,640 MW of thermal energy and over 900 MW of renewable energy, the company said.
In 2015, Sembcorp Renewables, a unit of Singapore’s Sembcorp Industries Ltd, acquired 60% in IDFC Alternative-backed Green Infra Ltd for Singapore $227 million (Rs.1,100 crore).
Several calls and text messages sent to Anil Kumar Chalamalasetty, chief executive and managing director at Greenko went unanswered.
The sale process will help Welspun Renewables free up capital for its future projects, said the first person cited above.
“They raised capital last year and that has helped them with the ongoing development of projects. However, their other attempts to raise capital, such as business trust, a yield co in the US, have not worked out. They have decided to sell the existing portfolio to free up capital for investing in their future projects,” he said.
In October, Welspun Renewables received $617 million in funding. The investment was a combination of debt and equity infusion by the promoters, existing and new investors. The existing investors of Welspun Renewables include General Electric Co.’s unit GE Energy Financial Services and the Asian Development Bank.
In a statement in October, Welspun Renewables vice-chairman Vineet Mittal had said that Welspun plans to reach 1 GW in operational capacity by the end of this fiscal. Over the next few years, the firm is aiming at 5 GW in combined capacity between wind and solar projects.
India’s renewable energy sector has attracted strong interest from foreign funds after the government sharpened its focus on clean energy.
Prime Minister Narendra Modi is banking on renewables to fight climate change and has set an ambitious target of increasing India’s clean energy capacity by more than fivefold to 175 GW by 2022.
On Monday, Mint reported that Hero Future Energies Ltd, the renewable energy arm of the Hero Group, is in talks with CDC Group Plc and International Finance Corp. (IFC) to raise $150 million (about Rs.1,000 crore).
Last month, Canadian pension fund Caisse de dépôt et placement du Québec pledged an investment of $150 million in India’s renewable energy sector, while in October last year, Goldman Sachs-backed ReNew Power Ventures Pvt. Ltd raised $265 million in fresh equity from investors, including sovereign wealth fund Abu Dhabi Investment Authority.
“India always had a supportive policy framework for renewables, but now the central government’s push has encouraged many states to better them,” said Kameswara Rao, leader of the energy, utilities and mining practice at consultancy PricewaterhouseCoopers (PwC) India.
The continued challenges to conventional thermal power has pushed domestic power companies and investors to reconsider where they invest next, he said. “At the same time, Indian renewable developers are able to squeeze in more economies of scale and deliver at lower costs,” said Rao.
Source: Mint; 06 April 2016