New York-based alternative investment firm Stonepeak has emerged as the fourth shortlisted bidder to submit a binding offer to buy O2 Power, a renewable energy platform in India. The deal, which may rank among the largest green energy transactions in the country, is expected to have an equity value of around $1 billion and an enterprise value around $2.3 billion, said two people aware of the development.
Mint reported on 11 September that I Squared Capital, JSW Group’s JSW Neo Energy, and Macquarie Group had been shortlisted bidders to buy O2 Power. Talks are also on with Stonepeak to submit a binding offer.
“Stonepeak has been informed that they have been shortlisted from among the bidders that submitted NBOs,” said one of the two people cited above requesting anonymity.
With $71.2 billion of assets under management Stonepeak focusses on infrastructure and real assets. Seven bidders–I Squared Capital, JSW Neo Energy, Macquarie Group, Stonepeak, Edelweiss Alternative Asset Advisors’ Sekura Energy, Actis Llp, and Singapore’s Sembcorp Industries Ltd–had submitted their non-binding offers in the sale process run by Barclays to buy O2 Power.
European alternative asset manager EQT and Singapore’s Temasek-own hold 51% and 49%, respectively in O2 Power. They have invested $500 million in the company, which was founded by former ReNew Power executives Parag Sharma, Peeyush Mohit, and Rakesh Garg. O2 Power is targeting a portfolio of around 5 gigawatts (GW) and has already created a 4-GW portfolio.
Spokespersons for Stonepeak, Barclays, Macquarie Group, and O2 Power chief operating officer Peeyush Mohit declined to comment.
A Temasek spokesperson in an emailed response said, “We decline to comment on speculation.”
Queries emailed to the spokespersons for I Squared Capital, JSW Group, and EQT on 18 September remained unanswered.
These selected bidders will be given full data room access, after which the binding bids will be submitted. The deadline for submitting the binding offer is 19 October, post which the successful bidder will be given exclusivity to close the deal. The process has seen a lot of interest, with 13 prospective buyers having signed non-disclosure agreements for sale of O2 Power.
There is a sustained investor interest in India’s renewable energy space including the solar sector.
“Deal value in renewables jumped by a stunning 70% y/y in CY23. This is based on consolidation in a highly fragmented space which has kept returns limited across the value chain. It is epitomized by the fact that the top 5 solar generation players account for just 27% of the total installed capacity while the number for thermal power stands at 45%. Going forward, more consolidation is expected with strong interest from foreign funds and MLIs, and improving sectoral outlook,” SBI Capital Markets Ltd wrote in a report last month.
India has an installed renewable energy capacity of 180.79 GW, including 73.31 GW solar and 44.73 GW of wind power capacity. The government’s objective is to add 50 GW of green energy capacity annually to reach 500 GW renewable capacity by 2030.
“In CY22 and CY23, India accounted for 20% of Asia’s renewable energy M&A deal value (as per Deloitte),” the SBI Capital Markets report said and added, “Outlook for CY24 remains coruscant with several deals in the C&I segment also blooming, besides the mainstay of utility solar.”
Mint earlier reported that JSW Neo Energy and Sembcorp Industries Ltd have also been shortlisted to submit the binding bids for acquiring a significant majority stake in NIIF-backed Ayana Renewable Power Pvt Ltd in a deal having an equity value of around $800 million. Also, Sembcorp, and JSW Neo Energy are in fray to buy a majority stake in Shell Plc’ Sprng Energy group 1 GW operational assets, in a deal having an equity and enterprise value of $350 million and $1.1 billion, respectively.
Source: Mint