Global private equity fund Warburg Pincus has sold its stake in rooftop solar power producer Cleanmax Enviro Energy to Augment Infrastructure, a US investment firm. The deal, a mix of both primary and secondary capital, is worth Rs 1,650 crore, a senior company official said.
“Augment has acquired a controlling stake in the company as Warburg Pincus and IFC have exited through this transaction,” said Kuldeep Jain, founder and managing director, Cleanmax.
Around Rs 750 crore of primary capital will help the company expand capacity and support its inorganic growth plans, Jain said.
While Jain refused to share further details of the transaction, sources said that Warburg Pincus has made around 18% IRR on its investment in the company. “Both the funds together
home around Rs 900 crore, almost double of what they had pumped into the company over the years,” a person with knowledge of the deal said.
The transaction comes at a time when profitable exits from infrastructure and energy ventures are hard to come by.
Warburg Pincus invested in the company in 2017. “This journey has validated our strategy to back the market leader in the Indian C&I space led by a talented management team,” said Saurabh Agarwal, Managing Director, Warburg Pincus.
Founded in 2011, Cleanmax offers a range of green power sourcing options including rooftop solar, offsite solar, and wind solar hybrid. The company currently serves more than 150 customers including Facebook, Adobe, Cargill Foods, Volvo, Tata Group, Mahindra Group, Grasim, Manjushree, and others.
The company has expanded its operating capacity from 110 MW in 2016 to 760 MW. “We plan to ramp up to 2,000 MW by 2023-24,” Jain added.
As part of the transaction, the company has bought back employee stock options worth Rs 30 crore, with around 125 employees participating in the round.
The company’s earnings before interest, tax, depreciation and amortisation or Ebitda for the financial year ending 2020-21 stood at Rs 252 crore. “We look to grow to clock around Rs 350 crore of Ebitda for the current financial year,” Jain added.
The company is also backed by UK Climate Investments (UKCI), the UK government’s green fund managed by Macquarie Infrastructure and Real Assets. UKCI invested Rs 275 crore. “We are considering an initial public offering in another three to four years to give exit options to our other investors,” Jain said.
This is Augment Infrastructure’s first investment in an Indian renewable energy company.
“We believe that Cleanmax is well poised to benefit from the strong growth tailwinds in the sector,” said Darius Lilaoonwala, Managing Partner, Augment Infrastructure.
Warburg Pincus has been on a roll, so far this year. Through its investment in Ola, boAT, Adani Ports, Good Host Spaces and Parksons, the firm is increasingly writing bigger cheques for Indian businesses. As far as exits are concerned the fund has either partially or fully exited its investment in Gangavaram Port, Kalyan Jewellers and Bharti Telemedia this year. Its other portfolio firms such as CarTrade and Fusion Microfinance have also lined up their initial public offerings.
According to a July 2021 report by Indian Brand Equity Foundation, the renewable energy sector has received more than $42 billion of investments since 2014. The report predicts that the sector will see $500 billion worth of investments by 2028.
With bigger conglomerates such as Adani Group and Reliance Industries looking at the sector, the competition is going to intensify. While the Adani Group aims to become the world’s largest solar power company by 2025 and the biggest renewable energy firm by 2030, they have been ramping up their efforts in the sector since the beginning of the year. In May, Adani Green Energy Ltd. acquired 100% interest in SB Energy India from SoftBank Group (SBG) and Bharti Group which has a total renewable portfolio of 4,954 MW spread across four states in India. Before that in March it acquired a 250 MW solar power project in the northern state of Rajasthan (commissioned by Hero Future Energies) for $136.20 million and acquired a 100% stake in SkyPower Global’s 50 MW solar power project in Telangana.
