MUMBAI: A private equity fund, jointly managed by State Bank of IndiaBSE 1.51 % and Australia’s Macquarie Group, is in early talks with Hindustan Power Projects (erstwhile Moser BaerBSE 0.69 % Power Projects) to acquire operational alternate power assets portfolio of the New Delhi-based company, two people with knowledge of the development said.
Hindustan Power Projects has an operational portfolio of 270 mw and is selling operational assets to fund expansion of the capacity. The sale, if executed, would be one of the largest operational solar portfolio deals in India. The company has reached out to core infrastructure asset owners such as Macquarie, one of the persons said.
“Yes, a process is on, but it’s in very early stages. The company is selling operational assets, which are clean and has got no tailwinds,” said the second person quoted above.
Spokespersons for SBI-Macquarie and Hindustan Power declined comment.
Hindustan Power has been producing solar panels since 2005-06, but the financial crisis and aggressive Chinese competition put the company on the back foot. In 2010, it raised $300 million from Blackstone in one of the largest infrastructure investments in India. SBI-Macquarie has invested in the thermal power assets of the company.
Solar power in India is a fast developing industry, with a cumulative installed grid connected solar power capacity of 7565 MW as of May 31, 2016, with a proposed target of 100 000 MW by 2022. The government has set a target of $100 billion of investment and 100 GW of solar capacity including 40 000 MW from rooftop solar by 2022.
Since renewable energy forms a tiny portion of the overall power consumption, it has negligible impact on the transmission network, according to analysts. “However, the impact will be visible as we move towards having 10-15% of India power consumption from RE in next the 5-7 years,” JM FinancialBSE -2.12 %, a brokerage said in a note on June 29.
JM believes that the current round of mergers and acquisitions in the renewable energy space will move towards a larger consolidation. “We continue to watch the solar IPP space with enthusiasm, as the current round of M&A leads to larger players with stronger balance sheets (Tata Group, Sembcorp, Softbank Energy),” it said.
On June 13, Tata PowerBSE -0.14 % signed an agreement to buy Welspun Renewables portfolio of 1.1 gigawatt for an enterprise value of $1.4 b (Rs 10,000 crore) making the largest renewable asset sale in Asia. Some of the renewable companies are facing headwinds due to their financial trouble in their home country. America’s largest renewable energy maker SunEdison Inc which built a sizeable portfolio in India is planning to sell its assets.
