Days after its deal with CPPIB collapsed, shareholders of SB Energy have approached Adani Group with a proposal to buy them out from their struggling renewable energy venture, said multiple people involved. Talks between both sides have intensified over the last fortnight, ever since it became evident that the Canadian Pension Plan Investment Board (CPPIB) would not back down or accept several of their terms that were increasingly getting difficult to meet.
The due diligence by Adani Geen Energy Ltd, (AGEL), has begun through the final valuations have not been fixed yet, sources mentioned above said.
Set up in 2015, SB Energy is an 80:20 alliance between Softbank Group and Bharti Enterprises that had a target of setting up 20 GW of clean energy projects with an investment of $20 billion over 10 years.
Unlike last time, it is believed Sunil Mittal, chairman Bharti Enterprises, is driving the negotiations currently with Gautam Adani, chairman of the eponymous energy to ports and coal trading group. The $550 million CPPIB offer, however, has already set a valuation benchmark for SB Energy, feel industry officials who also believe Adani may seek to buy 100 per cent of the company, buying out both Softbank and Bharti. It is still not clear if the deal will eventually see a share swap or a cash transaction.
The current market capitalisation of Adani Green is Rs 1.71 lakh crore ($24 billion).
Queries sent to Adani Group, Bharti and Softbank were not immediately available.
Earlier in 2019, Softbank founder Masayoshi Son had refused to fund the high profile venture, forcing a global sale process. But with negotiations dragging on for months, he pulled the plug last week and terminated the exercise surprising even his colleagues. ET broke that story on last Thursday.
Even with a depressed offer, Softbank decided to pursue with the “distress sale” since it was not keen to fund the business any further.
SB Energy’s 4,000 MW capacity, half of which is operational and another half in the pipeline, would help Adani Green to bulk up its portfolio. A further 3,700 MW worth of projects are under “active development”, but construction hasn’t started on these as of yet.
Adani Green Energy Limited (AGEL), which was hived off the parent group in 2015 and listed publicly on the National Stock Exchange (NSE) in 2018, has been looking at expanding its portfolio via brownfield acquisitions to reach the 25,000 MW capacity target by 2025.
In FY 21, the clean energy giant bought assets from distressed companies Essel Group and SP Group’s Sterling and Wilson.
Adani Green has a total capacity of 15,240 MW worth of renewable energy projects across the country, out of which 3,470 MW is currently operational.
French energy giant Total has a 20% stake in Adani Green, which includes a 50% share of all of AGEL’s solar assets.
Recently, AGEL in March raised $1.35 billion senior debt facility with participation from 12 international banks “to finance its under-construction renewable portfolio”, one of the biggest financing deals in the renewables space in Asia.
As per Mercom Capital, Adani Green is the biggest renewable energy company in the world, based on asset capacity. It has projects in all major renewable energy states in India, including Rajasthan, Gujarat, Madhya Pradesh, Maharashtra, Tamil Nadu, and Andhra Pradesh.
AGEL has also won the biggest solar tender in the world for an 8,000 MW project, involving a total investment of about $6 billion. As part of the same bid, Adani will also manufacture 2,000 MW of solar cells and modules by 2022.
Source: Economic Times