Goldman Sachs Inc, Canada Pension Plan Investment Board and Abu Dhabi Investment Authority, the existing investors of ReNew Power, are putting in an additional $300 million into the green energy company through a rights issue, people with knowledge of the matter told ET.
Proceeds from the issue may be used for a combination of purposes. These include financing business growth and repaying existing debt taken for inorganic growth plans executed earlier. “The company wants to increase confidence levels among investors with the proposed fund mop-up,” said one of the persons cited above. ReNew is said to be repaying some debt obligation coming up in the next few months.
The rights issue follows earlier plans of a bond issuance, which has temporarily been put off due to tepid investor appetite globally for risk assets. Bonds could still be issued later.
It is not clear if Japan’s LNG major JERA, which has a 10% stake in the company, will invest in this round. ReNew Power, ADIA, CPPIB, and Goldman Sachs declined to comment.
Founded in 2011 by Sumant Sinha, a former chief operating officer at wind turbine maker SuzlonNSE -0.87 % Energy, ReNew Power has more than 4,300 MW of operational capacity and under-construction clean energy capacity of 3,200 MW across 16 states in India.
ReNew counts Goldman Sachs, ADIA, CPPIB, Asian Development Bank, Global Environment Fund and Japan’s JERA as its investors. JERA acquired 10% by investing around $200 million in 2017 at a valuation of $2 billion. To date, ReNew has raised about Rs 6,696 crore from all its investors.
Goldman Sachs, the early backer of the company in 2011, invested about $370 million in various tranches in 2013 and 2014. Goldman had plans to sell a significant stake through a secondary transaction in the proposed IPO in 2018.
Although Goldman has been seeking a partial exit for the past two years, valuation mismatches and concerns over low tariffs have deferred the exit.
In the proposed IPO, ReNew Power was expected to be valued at $4-5 billion, but that may have shrunk in the past one year. “Goldman Sachs has been approached by several global players to buy a significant stake in ReNew. However, Goldman is not keen to sell at a lower valuation,” said one of the persons cited above.
In 2017, solar power tariffs in India had fallen to a historic low of Rs 2.44 per unit, while wind power tariffs remain at Rs 2.77 per kilowatt hour (kWh).
Source: Economic Times