Private equity investor Bain Capital has entered into talks with Macquarie Capital to acquire a majority stake in Vibrant Energy, which provides green power to commercial and industrial units, said sources aware of the development.
ET first reported on 23 February that Macquarie had hired an investment bank to run a sale process for Vibrant Energy.
“Bain is currently doing due diligence on the company. A final offer is still some time away,” said one of the sources cited above.
The company is likely to fetch an equity value of around $200 million with an enterprise value of close to $500 million, the source added.
The Vibrant stake sale had also evinced interest from strategic investors such as Indonesian solar energy producer Sun Energy and global energy trading firm Vitol, ET reported on 31 August
“Some bulge bracket PE firms have evaluated other assets in the C&I sector in the past too. PE funds are keen to play in the energy transition space and are exploring various opportunities across the spectrum including C&I,” said the source.
Vibrant Energy, which primarily sells electricity to corporate and industrial (C&I) customers, operates a renewable energy portfolio of 132MW, with an active pipeline of 3GW. The group develops open access renewable energy solutions (wind and solar) for corporate customers. About 70% stake in Vibrant Energy is owned by Blueleaf Energy, a portfolio company of Macquarie’s Green Investment Group (GIG), while the rest is held by US-based ATN International.
In 2020, Blueleaf Energy Asia Pte entered India by acquiring a majority stake in Vibrant Energy Holdings from ATN International (ATN).
Blueleaf Energy has a development pipeline of solar, wind and storage projects in excess of 7GW globally. Macquarie’s GIG has 85+ GW portfolio under development across 25 markets globally.
In an interaction with ET in November, Pavaninder Singh, Partner – Private Equity at Bain Capital, said that energy transition is an important and long term theme that will see massive investments in the next decade and that Bain is keen on making opportunistic bets in the space.
In the energy transition space, last year Bain invested in a biofuels business called EcoCeres. In 2015, Bain Capital led a management buyout of Japan Wind Development Co. Ltd, a wind farm developer. Japanese civil engineering group Infroneer Holdings is buying the company from Bain Capital for about $1.4 billion, Reuters reported on 12 December.
“We do look at that space, but I would say it’s more selective. There is a lot of infrastructure and clean energy capital that chases those deals that has different return profile than what we look for. So I think while we’re keen on finding ways to play the broader theme, we are more selective in where we will play,” Singh told ET in November.
Last month, Bain Capital raised its fifth Asian private equity fund with a corpus of $7.1 billion, the biggest Asia focused PE fund to be raised in 2023.
Macquarie and Bain declined to comment on ET’s queries.
The Commercial and Industrial (C&I) renewables market in India is expected to grow by 47GW over the next five years, said a recent report from energy analyst firm Bridge To India. Corporate customers account for 51% of the country’s total consumption, the report said.
C&I customers’ PPAs (power purchase agreement) with renewable power projects are usually shorter than those with state-owned discoms. However, renewable projects’ renewal risk and tariff renegotiation risk are mitigated by lower tariffs paid by C&I customers for open access purchases than grid tariffs, rising electricity demand in India diversification over multiple customers, and, in some cases, equity share in the project, rating agency Fitch said in a report last year.
Source: Economic Times