German development finance institution Deutsche Investitions- und Entwicklungsgesellschaft (DEG), World Bank’s private-sector development arm International Finance Corporation (IFC) and Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ), are exploring a sale of their stakes in Azure Power, India’s first renewable energy company to list on the US stock market, said two people aware of the development, requesting anonymity.
The development comes amid the impending exit of Azure Power’s founder Inderpreet S. Wadhwa as chairman, chief executive officer and board member of the company and all its subsidiaries. On 3 May, the company had announced Wadhwa’s retirement plans.
New York Stock Exchange-listed Azure Power Global Ltd has a 3 gigawatts (GW) portfolio across 24 states in India. Founded in 2008, it had developed India’s first utility-scale solar project in the following year. Ahead of Azure’s initial public offering (IPO), CDPQ had picked up a stake worth $75 million as part of a private placement. Azure is also backed by IFC, venture capital fund Helion Venture Partners and DEG. In a first, Azure Power had raised $500 million through green bonds in August 2017, to repay its existing debt and for capital expenditure for its under-construction projects and growth.
“Post the announcement of the exit of Wadhwa, the promoters are exploring a stake sale and have initiated discussions for the same,” said the first persons cited above. The second person confirmed the development.
In December 2015, New Delhi-based Azure Power had filed for an IPO to raise $100 million by selling 6.8 million shares at $21-23 apiece. It sold 3.41 million shares in its IPO, including 2.24 million new shares and 1.16 million shares of existing shareholders, to raise $61.36 million.
Nathan Judge, head of investor relations, Azure Power, in an emailed response said: “The company has not been informed of any such plan by any of its large shareholders.”
The exploratory plans come at a time of relentless deal activity in India. Foreign investors have infused $1.02 billion equity investment in clean energy projects in 2019 so far, according to data compiled by consulting firm Bridge to India.
International equity investment in India’s clean energy sector was $283 million in 2016, $532 million in 2017 and $1.12 billion in 2018. This excludes all offshore debt funding and investments made by foreign developers in their Indian subsidiaries.
While a CDPQ spokesperson, in an emailed response, said: “Unfortunately, we cannot comment on founded or unfounded rumors”, a DEG spokesperson said: “For reasons of confidentiality, we cannot comment on any business activities in individual cases.”
Queries emailed to spokespersons for Helion Venture Partners and IFC on 16 July remained unanswered. Wadhwa did not respond to phone calls or messages on his cellphone.
Overseas investments in India’s green energy space have been growing, spread across solar power generation (roof-top and grid connected), wind power generation firms and electric vehicles. The electricity storage projects are gaining traction now. While several of Azure Power’s Indian peers have looked at raising money through IPOs, they haven’t yet been successful.
Globally, India is ranked fourth and fifth, respectively, in installed capacities for wind and solar power. With competitive solar bids and India’s wind energy sector having transitioned from a feed-in tariff regime, which ensures a fixed price for wind power producers, to tariff-based competitive auctions, obtaining finance at the lowest cost has become key.
Source: Mint