Private equity firm Actis Llp is close to buying a majority stake in 500 megawatts of solar projects in India owned by Finland’s state-controlled power utility Fortum Oyj, two people aware of the development said.
Fortum, the third-largest Nordic utility, and Actis are negotiating the share purchase agreement for the deal having an equity value upwards of €100 million.
Kotak Investment Banking is running the process that saw Actis, Canada’s Brookfield Asset Management Inc. and Edelweiss Infrastructure Yield Plus Fund’s Sekura Energy Ltd submitting separate bids.
In addition to selling 80% stake in existing projects, the deal with an enterprise value of around €300 million also involves bringing these 500MW solar projects under a new platform, in which Actis will contribute equity to develop projects in India and overseas totalling around 2.5 gigawatts.
Sanjay Aggarwal, MD of Fortum India Pvt. Ltd and global head for solar at Fortum, declined to comment. Spokespersons for Actis and Kotak Investment Banking did not respond to queries emailed late on Friday night.
“The proposed deal is for Actis acquiring 80% stake in this operational 500MW of solar projects, with the 20% to be retained by Fortum,” said one of the two people cited above, requesting anonymity.
Actis has taken significant bets on India’s green economy and plans to invest $850 million to build two green energy platforms for setting up grid-connected solar and wind power parks, and the commercial and industrial (C&I) segment respectively, as reported by Mint earlier.
The PE firm plans to grow its renewable energy platform in India, Sprng Energy, to 2GW capacity before it starts to monetize the assets. Actis has been present in this space and had earlier sold Ostro Energy Pvt. Ltd to ReNew Power Ventures in 2018 at an enterprise value of $1.5 billion.
The stake sale is part of Fortum’s strategy to take risks early on and eventually monetize a project to raise capital for new ventures. As part of this playbook, Fortum had in June 2018 agreed to sell a 54% stake in 185MW solar projects in India to UK Climate Investments (40%) and Elite Alfred Berg (14%).
The Fortum deal has witnessed significant traction with interest from investors such as Canada Pension Plan Investment Board, KKR, Macquarie Group and O2 Power.
Actis, which invests only in emerging markets, has committed $2.1 billion in the Indian market so far spanning the energy, financial services and real estate sectors.
