Moneycontrol
Last Updated : Dec 12, 2018 01:18 PM IST | Source: Moneycontrol.com

Hero Future Energies looks to raise $200 million from PEs for 25% stake

The company is eyeing a valuation of $800 million, once the money is raised against 25% equity.

Dhirendra Tripathi @dtrips

Hero Future Energies, the renewable energy firm of the Pawan Munjal-led Hero group, is looking to raise $200 million in fresh funding from private equity investors, according to a market source. The company, founded only six years ago, is eyeing a valuation of $800 million, once the money is raised against 25 percent equity. The focused on running power plants based on renewable sources like solar and wind.

“The company is talking to a set of private equity investors and looking at a valuation of $700 million-$800 million on the expanded capital base. Given the size, it is possible more than one investor may come in,” the source said.

The company currently has a portfolio of 1,200 MW and plans to take it to 2,700 MW by 2020 and over 3,500 MW by 2022. It implements both grid connected and rooftop solar projects and is currently running capacities in 12 states.

This is not the first time the company is looking to raise private equity. The company had in January 2017 raised $125 million from International Finance Corporation — the private sector investment arm of the World Bank — and the IFC Global Infrastructure Fund — to fuel its growth plans.

Hero Future Energies is run by Rahul Munjal as its Chairman and Managing Director. Rahul is the son of late Raman Kant Munjal, son of Hero group founder, late Brijmohan Lal Munjal.

After the big push of the Narendra Modi government when it came to power in 2014, the going hasn’t entirely been smooth for the country’s renewable energy sector in the last two years, partly owing to (solar) tariffs falling to unreasonably low levels.

The strains in the sector were also reflected in Hero Future’s competitors like ReNewPower and Sembcorp Energy India delaying their plans to float initial public offerings after they received lukewarm response from anchor investors.

ReNew Power’s IPO size at Rs 2,600 crore was also found to be too big for market appetite. Any public listing seems possible only after the April-May general elections next year.

The Narendra Modi government has a target of achieving 175 GW in renewable power capacity by 2022 — 100 GW from solar, 60 MW from wind, 10 GW from bio energy and 5 GW from small hydro plants of less than 25 MW capacity each.
First Published on Dec 12, 2018 01:17 pm
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