Torrent Power Ltd and Singapore’s Sembcorp Industries Ltd are in the fray to buy US private equity firm Global Infrastructure Partners’ (GIP) Indian clean energy platform Vector Green Energy, said two people aware of the development, in what is set to become one of the biggest clean energy deals in India.
Standard Chartered is running the sale process for the transaction which is expected to have an equity value of ₹3,000 crore and enterprise value of around ₹5,000 crore, the people cited above said requesting anonymity.
Vector Green Energy has 700 megawatt (MW) operational and 300 MW under-construction wind and solar energy assets, besides another 1 gigawatt (GW) in the pipeline that is investment-ready. Some of these assets were acquired from IDFC Alternatives in 2018, and RattanIndia Group in September 2020.
Torrent and Sembcorp have been active in India’s green energy space. While Torrent has an installed power generation capacity of 4.16 GW, of which 1.06 GW is renewable capacity, Sembcorp’s India operations has a 5 GW portfolio through its units Sembcorp Energy India Ltd and Sembcorp Green Infra Ltd. Sembcorp has a global portfolio of 15 GW, of which 5.7GW is in renewable energy. A spokesperson for GIP in an emailed response said, “As a matter of policy, we don’t comment on market speculation.”
While a spokesperson for Standard Chartered declined comment, spokespersons for Vector Green Energy and Sembcorp Industries did not answer queries emailed on Monday evening.
Mint reported on 28 March about GIP appointing Standard Chartered to conduct the sale of Vector Green Energy after the Andhra Pradesh high court ruled in favour of renewable energy developers over the state government’s decision to reopen contracts they had signed under the previous N. Chandrababu Naidu government. “There are no large green energy platforms or big assets left. Hence, the growing interest of investors,” said one of the two people cited above requesting anonymity.
India has an installed renewable energy capacity of 160.92 GW, with 74.76 GW under implementation. Global investors have been active in India’s green energy space as the country undergoes an energy transition, and electricity demand rebounds from the declines seen during the deadly second wave of the pandemic. Peak electricity demand in the country touched a record high of 211 GW on 9 June.
Investor interest is also sustaining, given the government’s efforts to make state-run electricity distribution companies (discoms) financially stronger, with Prime Minister Narendra Modi drawing attention to the ₹2.5 trillion worth of pending dues of gencos and discoms. State-run Power Finance Corp. Ltd and unit REC Ltd are expected to lend about ₹1.45 trillion to discoms under the one-time settlement scheme. As per the scheme, dues of the discoms, including late payment surcharges, will be converted into equated monthly instalments (EMIs) ranging from 12-48 months depending upon the quantum of arrears. The Vector Green Energy deal is among several large clean energy deals in India that have either been finalized or in the pipeline.
Malaysia’s state-run oil and gas giant, Petroliam Nasional Bhd or Petronas in talks with ReNew Energy Global PLC for setting up green energy projects in India through joint ventures. Also, private equity firm Actis LLP has placed the winning bid for Kolkata-based Atha Group’s 400 MW solar power assets at an enterprise value of around $270 million as reported by Mint earlier.
Recently, a consortium led by the world’s largest asset manager BlackRock and UAE sovereign wealth fund Mubadala Investment Co. agreed to invest ₹4,000 crore for a 10.53% stake in Tata Power Renewables.
