Ending months of negotiations, KKR has agreed to buy 5 solar assets of 317 MW from the cash strapped Shapoorji Pallonji Group for $200 million. The divestment will help the group in its deleveraging exercise.
ET was the first to report on this impending transaction on 28th November.
The portfolio comprises of assets with a capacity of 169MWp in Maharashtra and assets with a capacity of 148 MWp in Tamil Nadu.
KKR began to focus on Asia’s infrastructure sector with a series of hires beginning about a year ago, and launched its fundraising in 2019. About 50% of its maiden fund has just been raised. It made its first investment in May via a $400-million deal to take control of India Grid Trust (IndiGrid), the infrastructure investment trust of Sterlite Power Transmission.
“SP Infra and the Shapoorji Pallonji Group are recognized in India and worldwide for the high quality of their renewable energy projects, and given the government’s ambitious target of achieving 175GW of renewable energy capacity by 2022, we believe this is an attractive time to invest in this portfolio and provide even greater solar energy solutions to communities across India,” Sanjay Nayar, CEO, KKR India said in a statement.
Last year, Sprng Energy, a renewable energy platform of Actis LLP, acquired 194 mw of solar assets from Shapoorji Pallonji Solar Holdings for an enterprise value of $200 million. Now the residual 260 mw is also up for grabs.
EY acted as KKR’s M&A advisor and AZB & Partners and Simpson Thacher acted as KKR’s legal advisors. Edelweiss, Khaitan & Co. and PwC acted as SP Infra’s respective M&A, legal and tax advisors.
SP Group watchers said the divestments are part of a long term strategy, launched in 2018, to deploy more capital and equity to develop greenfield assets. But matters have gone downhill since then, they said, with the group seeking an extension to repay an intercompany loan of Rs 2,341 crore (as of September 2019) to the recently listed EPC arm — Sterling and Wilson Solar.
“This deal further demonstrates SP Infra’s continued track record of developing high-quality infrastructure assets in its chosen spaces, creating value for further growth in its businesses, and be the partner of choice for high-quality international investors like KKR,” added Mukundan Srinivasan, Managing Director of SP Infra.
According to a CARE Ratings report, dated February 21, the SP Group’s debt increased from Rs 28,000 crore in March to Rs 30,000 crore as on September 30, 2019 while the company’s standalone debt stood at Rs 9,019 crore as of September-end. Matters have compounded since the asset sale exercises – Eureka Forbes and solar assets – are also far from closure. The sale process for the former has been paused with the onset of Covid-19 after muted response from potential buyers who baulked at the premium valuation.
Source: Economic Times