JSW Neo, Sembcorp, ONGC shortlisted to acquire NIIF backed Ayana in $800 million deal, binding bids by 19 August

Industry:    3 months ago

State-run Oil and Natural Gas Corp. (ONGC), JSW Group’s JSW Neo Energy, and Singapore’s Sembcorp Industries Ltd have been shortlisted to submit binding bids to buy a significant majority stake in Ayana Renewable Power Pvt. Ltd, two people aware of the development said, in what may rank among the biggest transactions in India’s green energy sector.

These firms were the ones to submit their non-binding offers (NBOs) for the deal with an equity value of around $800 million, and are presently conducting due diligence, the people cited above said on the condition of anonymity. The National Investment and Infrastructure Fund (NIIF) backed company, which has a 5-gigawatt (GW) portfolio of operational and under-construction projects, is looking to sell a significant majority stake, that may translate into up to 100% stake sale.

The sale process is being run by Standard Chartered, with the last date for submitting final bids on 19 August.

“The Ayana transaction is a big one for the Indian renewable energy space and is being tracked intently for its outcome,” said one of the two people cited above.

Interestingly, Sembcorp and JSW Neo Energy are also eyeing a majority stake in the 1 GW operational assets of Shell Plc’s Sprng Energy group, in a deal having an equity and enterprise value of $350 million and $1.1 billion respectively, as reported by Mint on Tuesday.

ONGC in fray

Mint earlier reported about ONGC entering the fray, and Standard Chartered being mandated to manage the sale of Ayana Renewable Power, with the shareholders also seeking to raise an additional $400 million to finance the company’s growth. The Economic Times on 4 May reported about JSW Neo Energy, and Sekura Energy among five bidders that have made non-binding offers to acquire a controlling stake in Ayana Renewable Power; with Masdar, Sembcorp and Macquarie also in the fray.

“Post the submission of the NBOs, ONGC, JSW and Sembcorp were shortlisted. They are conducting due diligence to submit their binding bids for which 19 August is the bid submission deadline,” the second person said.

Bengaluru-headquartered Ayana Renewable Power is majority-owned by NIIF. Its other shareholders include the UK government’s British International Investment and Eversource Capital. Ayana plans to build a 10GW portfolio by 2025 and has projects in Andhra Pradesh, Tamil Nadu, Karnataka, Rajasthan and Gujarat.

Spokespersons for Standard Chartered, JSW Group and British International Investment plc declined comment. Spokespersons for NIIF, Ayana Renewable Power, Sembcorp, and Eversource Capital did not respond to queries emailed on late Monday night. An ONGC spokesperson did not immediately respond to queries emailed on Tuesday.

Deal-making active

India’s deal-making space has been active across the sectors with a special focus on clean energy. “India Inc. witnessed 195 deals totaling $8.4 billion, reflecting a modest 16% increase in volumes. The consistent month-on-month volume growth since April 2024 suggests growing investor confidence and domestic resilience, especially around the election period,” Grant Thornton Bharat said in its Dealtracker report for July released on Tuesday. Several deals are in play, thanks to opportunities in India’s energy transition space.

Energy and natural resources led deal activity, with 12% deal volumes driven by the energy & renewables segment that contributed 50% of volumes and 92% of values, the Grant Thornton Bharat report said, adding, “The Union Budget 2024 displayed the government’s plans for growth in the infrastructure, solar energy, railways, cleantech and the electric vehicles space.”

NIIF is sponsored by the Indian government, which holds a 49% interest in it. It primarily focuses on investing in core infrastructure sectors such as transportation, airports, ports, logistics and roads, green energy and digital. It manages around $5 billion of equity capital commitments across its three funds—Master Fund, Fund of Funds and Strategic Opportunities Fund—with investments in sectors such as ports and logistics, renewable energy, roads, digital infrastructure, and manufacturing.

Eyeing acquisitions

Given the changing hydrocarbon energy landscape, ONGC has been actively pursuing acquisitions in the clean energy space. Attracted by India’s energy transition trajectory, global oil majors including Shell Plc, Total, Thailand’s PTT Group and Malaysia’ state run Petronas unit Gentari Sdn Bhd have already established a presence in India’s green energy sector, as the conventional hydrocarbon space undergoes disruption. ONGC, on its part, plans to spend ₹1 trillion on green initiatives by 2030 to reduce its carbon footprint as part of a broader effort to achieve net zero emissions by 2038. ONGC has a renewable energy portfolio of 189 megawatt (MW) as of FY23, with plans to ramp it up to 10 GW by 2030.

Meanwhile, JSW Neo Energy has bought 1.75 GW of renewable energy projects from Mytrah Energy at an enterprise value of ₹10,530 crore; and is also among firms that has signed non-disclosure agreements (NDA) to buy European alternative asset manager EQT and Singapore’s Temasek’ renewable energy platform in India O2 Power, in a deal having an equity value of around $1 billion. JSW Neo Energy has a 13.6 GW generation portfolio, of which 2.6 GW is in the construction stage. Singapore Exchange listed Sembcorp has also lined up an ambitious green energy play in India and is also among suitors for Brookfield Renewable’s 1.6-gigawatt (GW) portfolio in India in the deal expected to have an equity value of around $800 million.

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