INOXGFL Group has hired EY for a planned majority stake sale in its commercial and industrial (C&I) business, two people aware of the development said, a transaction with a potential equity value of around $200 million.
“It will be a majority stake sale mainly through primary infusion, and the process is at an early stage,” one of the two people cited above said, requesting anonymity.
An EY spokesperson declined comment. Queries emailed to an INOXGFL Group spokesperson on Tuesday evening remained unanswered till press time.
Devansh Jain, executive director of INOXGFL Group, had said in an earlier interview to Mint that Inox Wind, a group company focused on wind energy solutions, plans to set up a C&I vertical to primarily cater to the group’s captive power demand, which is around 500-600 MW.
Noida-headquartered INOXGFL Group is present in chemicals manufacturing and renewable energy businesses through Gujarat Fluorochemicals Ltd (GFL); GFCL EV Products Ltd; GFCL Solar & Green Hydrogen Products Ltd; Inox Wind Ltd; Inox Green Energy Services Ltd; and Inox Wind Energy Ltd. Inox Green Energy Services Ltd is one of the major wind power operations and maintenance (O&M) service providers in the country, servicing a 3.2 giga watt (GW) portfolio.
India’s C&I segment has been attracting strong investor interest of late, driven by rules that allow large power users to source energy from the open market rather than the costlier grid. C&I projects are also shielded from risks such as power procurement curtailment by state-run power distribution firms.
Also, state electricity regulatory commissions (SERCs) have implemented time of day (ToD) tariffs—varying rates at different times of the day—for large C&I consumers, which has helped sustain investor interest and deal activity in the space as reported by Mint earlier.
Most recently, Serentica Renewables, promoted by Sterlite Power, has decided to sell a minority stake to raise around $300 million. Also, EverSource Capital-backed Radiance Renewables Pvt. Ltd has a formal mandate to Rothschild & Co. for the sale of its C&I platform. In addition, there is significant interest to acquire Macquarie Asset Management’s Green Investment Group platform Vibrant Energy, which has a 1.5 GW portfolio in the C&I sector.
“The reasons for the increased adoption of renewable generation by the industry is largely driven by the theme of decentralization and decarbonization,” said Sanjeev Aggarwal, founder and chairman, Hexa Climate Solutions, adding that a combination of solar, wind, and batteries have made it possible for industries to use renewable power to reduce costs and carbon emissions.
“This theme has further been supported by the government policy of encouraging open access for consumers,” said Aggarwal, who set up Hexa Climate Solutions along with New York-based private equity fund I Squared Capital. The latter will invest around $500 million in Hexa, which will cater to the C&I sector.
India has an installed renewable energy capacity of 180.79 GW, which includes 73.31 GW solar and 44.73 GW of wind power capacity. The government’s playbook is to add 50 GW of green energy capacity annually to reach 500 GW renewable capacity by 2030.
Also, India’s updated Nationally Determined Contribution (NDC) submitted to the United Nations Framework Convention for Climate Change (UNFCCC), has committed to achieve 50% of installed power generation capacity from non-fossil fuel-based energy sources by 2030.
“The electricity industry in India is going through a fundamental shift of moving away from monopolistic discoms to market-based transactions and the keenness of the industrial buyers and electricity suppliers to participate in the same is reflected in the current activity,” Aggarwal added.
Attracted by the opportunity, state run REC Ltd’s arm REC Power Development and Consultancy Ltd and Bharat Heavy Electricals Ltd (Bhel) this month announced a partnership to develop renewable energy projects that will focus on the C&I segment.