Avaada Energy emerges lead suitor to acquire 340 MW solar power assets of Essel Group

Entrepreneur Vineet Mittal-controlled renewable energy firm Avaada Energy has emerged as the front-runner to acquire around 340 MWs of solar power assets owned by the Subhash Chandra-backed Essel Group, multiple industry sources with knowledge of the matter told Moneycontrol.

“The deal is in the final lap and these assets are housed in 9 SPVs ( special purpose vehicles) of Essel Infraprojects located in Maharashtra, Odisha and UP,” one of the persons cited above told Moneycontrol.

A second person said the deal was likely to be struck for around Rs 1,500 crore to Rs 1,600 crore and added that the proceeds would be used by Essel Infra to pay back its bondholders and lenders. At the holdco level, Piramal Capital & Dutch pension fund manager APG Asset Management are the firm’s bondholders while L&T Finance is the lender at the SPV level.

“An official announcement on the proposed transaction can be expected shortly once internal approvals are secured. There were other suitors in the fray earlier but Avaada Energy which now counts a Thai energy major as it’s investor is the lead contender,” added a third person.

All the three persons above spoke to Moneycontrol on the condition of anonymity.

According to a report dated August 17, 2021 by Acuris Group, the Essel Group appointed advisors and the likes of O2 Power, a renewable energy company owned by Temasek Holdings & EQT Infrastructure, Ayana Power and some domestic power generators had shown initial interest in the transaction. Trident Advisory , founded by Vikas Dawra, ex-head ( Investment Banking) and CEO, Yes Securities is the sell side advisor for the transaction.

Email queries were sent to Essel Infra, Avaada Energy and Piramal Group followed by reminders but the emails were left unanswered at the time of publishing this article. When contacted, APG Asset Management & Trident Advisory declined to comment. L&T Finance could not be reached for an immediate comment.

THE AVAADA ENERGY STRATEGY

In July 2021, as part of Thailand’s biggest ever investment into India , energy major PTT Group acquired 41.6 per cent stake in Avaada Energy Pvt. Ltd for about $454 million.

Referring to its expansion plans in the clean energy space, Avaada Energy had said “The investment in this platform aligns with the company’s growth strategy in renewable energy business internationally and enhances the company’s expertise in the solar power generation as well as the business collaboration in the area of the company’s renewable energy business in the future. In addition, Avaada aims to expand its renewable energy portfolio in accordance with significant growth expected in electricity demand in India.”

Vineet Mittal is the former promoter of Welspun Energy and left the Welspun Group after selling the entire 1.1 GW renewable energy portfolio of Welspun Energy To Tata Power for $1.4 bn.

Back in March 2016, Piramal Enterprises Limited and APG Asset Management jointly invested Rs 900 crores ( $132 mn) in Essel Green Energy Private Ltd, the solar platform vehicle of Essel Infraprojects Ltd.

The last month saw two other deals struck in the infra sector. Reliance Industries said it would acquire a 40 per cent stake in Shapoorji Pallonji group owned Sterling and Wilson Solar Ltd in a multi-stage deal for around Rs 2,845 crores. Additionally, IRB Infrastructure said it would raise Rs 5,437 crores from Singapore’s GIC and Spain’s Cintra by selling 41 per cent stake.