New York-based private equity firm I Squared Capital, JSW Neo Energy, a subsidiary of India’s JSW Group, and Macquarie Group, one of the largest foreign infrastructure investors in the country, have been shortlisted to submit binding bids to buy renewable energy platform O2 Power, in a deal that is likely to peg its equity value at $1 billion and enterprise value at $2.3 billion.
Talks are also on with New York-based alternative investment firm Stonepeak to take it to the next stage of the sale process for submitting binding offer in a deal that will rank among the largest green energy transactions in the country, said two people aware of the development.
“I Squared Capital, JSW Group’s JSW Neo Energy, and Macquarie Group have been informed that they have been shortlisted from among the bidders that submitted NBOs (non-binding offers). The plan is to take one or two additional bidders to the next stage, for which talks are on,” said one of the two people cited earlier, requesting anonymity.
Enterprise and equity value are business valuation methods in mergers and acquisitions. Enterprise value, in simple terms, is the total sale price of the company, while equity value is part of the enterprise value that’s pocketed by equity holders after paying off debt.
These selected bidders will be given full data room access, after which the binding bids will be submitted. The deadline for the submission of binding offers is 19 October, and the successful bidder will be given exclusivity to close the deal.
Mint had reported in August that seven bidders, including I Squared Capital, JSW Neo Energy, Macquarie Group, Stonepeak, Edelweiss Alternative Asset Advisors’ Sekura Energy, Actis Llp, and Singapore’s Sembcorp Industries Ltd had submitted their non-binding offers (NBOs) in the sale process run by Barclays to buy European alternative asset manager EQT and Singapore’s Temasek-owned O2 Power.
13 prospective buyers
The process has seen a lot of interest, with13 prospective buyers that had signed non-disclosure agreements (NDA) for the sale of O2 Power.
EQT and Temasek hold 51% and 49%, respectively, in O2 Power, and have invested $500 million in the company founded in 2019 by former ReNew Power executives Parag Sharma, Peeyush Mohit, and Rakesh Garg. O2 Power is targeting a portfolio of around 5 GW and has already created a 4-GW portfolio.
O2 Power chief operating officer Peeyush Mohit and a Barclays spokesperson declined comment.
A Temasek spokesperson in an emailed response said, “As a matter of policy, Temasek does not comment on market speculation.”
Spokespersons for Macquarie Group, Stonepeak, Actis, and Edelweiss Alternatives also declined comment.
Queries emailed to the spokespersons of I Squared Capital, JSW Group, EQT, and Sembcorp on 3 September remained unanswered till press time.
There is a sustained investor interest in India’s green energy transition play including renewable energy (RE). India has an installed renewable energy capacity of 180.79 GW, including 73.31 GW solar and 44.73 GW of wind power capacity. The government aims to add 50 GW of green energy capacity annually to reach 500 GW capacity by 2030.
As reported by Mint, JSW Neo Energy, and Sembcorp Industries Ltd have also been shortlisted to submit binding bids for acquiring a significant majority stake in National Investment and Infrastructure Fund (NIIF)-backed Ayana Renewable Power Pvt Ltd in a deal having an equity value of around $800 million. Also, Sembcorp, and JSW Neo Energy are in fray to buy a majority stake in Shell Plc’ Sprng Energy group’s 1 GW operational assets, in a deal having an equity and enterprise value of $350 million and $1.1 billion respectively.
Seasoned investor
I Squared Capital is not new to India’ infrastructure space. It had invested $150 million in Amplus Energy Solutions Pvt. Ltd in April 2015 that was sold to Malaysia’s state-run oil and gas company, Petroliam Nasional Bhd or Petronas, in April 2019 for ₹2,700 crore. I Squared Capital has also set up a climate solutions platform—Hexa Climate Solutions—with Amplus founder Sanjeev Aggarwal wherein the New York-based private equity fund will invest around $500 million. I Squared Capital is also an investor in Singapore-based Cube Highways and Infrastructure Pte. Ltd., one of India’s largest private sector operators of toll roads which has emerged as the likely winner to acquire the roads assets of NIIF’s Athaang Infrastructure, in a deal having an equity value of around ₹4,000 crore.
JSW Neo Energy has a 13.6 GW generation portfolio, of which 2.6 GW is under construction. It bought 1.75 GW of renewable energy projects from Mytrah Energy at an enterprise value of ₹10,530 crore. Macquarie Group has been investing in India’s infrastructure space since 2008 and is focussed on energy transition, infrastructure and digital communications.
Source: Mint