Tata Power Ltd and Actis LLP are in separate talks to buy the solar power business of Subhash Chandra’s Essel Infraprojects Ltd, two people aware of the development said.
The interest from the Indian power producer and the UK-based private equity fund makes it a four-horse race for Essel’s solar power assets which are spread across Uttar Pradesh, Odisha and Karnataka. Greenko Group and Hero Future Energies Pvt. Ltd are already vying for these assets.
Discussions are focused on the final valuation and both Tata Power and Actis have made non-binding offers, said the first person. “Both are conducting due diligence which is expected to completed in next few weeks,” the second person said.
Mint reported on 19 October about Essel Infraprojects hiring Investec India to find a buyer for its solar business. On 5 February, Mint reported that Greenko and Hero Future had begun talks for these assets.
Essel Infraprojects has a presence across renewable energy, transportation, electricity transmission and distribution, and urban infrastructure. It has 685 megawatts (MW) of solar power capacity, of which 165MW is operational. An additional 520MW of solar projects is under construction. Emails sent to Essel Infraprojects, Tata Power and Investec remained unanswered until press time while an Actis spokesperson declined to comment.
If successful, the transaction would mark Tata Power’s biggest acquisition of solar assets since 2016 when it acquired 1.1 gigawatt (GW) renewable energy portfolio of Welspun Energy Ltd for $1.4 billion. Tata Power has said that it is aiming to draw up to 40% of its generation capacity from clean energy sources by 2025. It has also set a target to expand the capacity of its renewable energy unit to 20,000 MW during this period.
For Actis, which sold one of its renewable energy platforms Ostro Energy Pvt. Ltd to ReNew Power Ltd for an estimated Rs10,000 crore in April, a potential acquisition will add to its other green energy platform Solenergi Power Pvt. Ltd, which recently won a bid to set up a 250MW plant at the Rewa Ultra Mega Solar Park in Madhya Pradesh.
India’s renewable energy space, especially the solar power segment, has seen significant consolidation in recent years.
A number of large assets have changed hands as power tariffs fell to record lows due to intense competition, backed by low financing costs and falling module prices.
In 2017, India’s solar power tariffs declined to Rs2.44 per kWh from Rs10.95-12.76 per kWh in 2010-11.
Mint reported in February that the Shapoorji Pallonji (SP) group has put its entire solar portfolio of more 400MW on the block in a transaction potentially valued at Rs1,200 crore and had appointed Credit Suisse as adviser for the transaction.
Mint reported in April that ReNew Power Ventures the largest green energy company in India, will file draft share sale documents with the markets regulator for a $900 million initial public offering.
Source: Mint