Yet another big-ticket deal is brewing in the clean energy segment as Continuum Green Energy which is controlled by Morgan Stanley Infrastructure Partners has launched the sale process of a 100 percent stake in the India focused renewable energy platform, multiple industry sources with knowledge of the matter told Moneycontrol.
“An understanding has been reached between the investor Morgan Stanley and the founder group and now the entire 100 per cent stake in the firm is up for grabs. The deal was launched late Monday night and the expected valuation is in the range of $700 million to $900 million,” said one of the persons above.
Another person said that the deal value could be upwards of $1 billion but would depend on the negotiations with suitors as the deal progressed.
Morgan Stanley Infrastructure Partners, which is seeking an exit, holds around 83 per cent stake in the firm which was set up by founders Arvind Bansal and Vikash Saraf in 2009.
North Haven Infrastructure Partners, a global infrastructure fund managed by Morgan Stanley Infrastructure Partners, invested $212 million in Continuum Energy back in 2012. To be sure, in the past, there have been reports that the founder group was keen to buy out Morgan Stanley’s share.
A third person told Moneycontrol that teasers had been sent to a clutch of strategic suitors and private equity funds and that investment banks Citi and Deutsche Bank were jointly advising on the proposed transaction.
Several prominent strategic players like Norway’s Statkraft, US based Sun Edison ( which went bankrupt) and ReNew Power have explored a stake buy in Continuum Energy in the past, according to reports.
“The founders see an upside in the business and at the option of the incoming investor, they are also open to invest money and partner for the next level of growth,” a fourth person privy to ongoing talks said.
A fifth person added that Continuum is one of the last clean energy targets in India having large scale and size.
“It’s a differentiated platform in the sense that it has more than 150 commercial and industrial clients (C&Is), making it arguably the largest such platform in the C&I segment in India,” this person told Moneycontrol.
All the five persons above spoke to Moneycontrol on the condition of anonymity.
Continuum Green Energy, Citi and Deutsche Bank declined to comment. Moneycontrol is awaiting responses to email queries sent to Morgan Stanley Infrastructure Partners and could not elicit an immediate comment. This story will be updated as soon as we hear from these firms.
Green Energy M&A
The clean energy space has been buzzing with M&A activity in recent times. On September 22, Moneycontrol had reported that Sembcorp, a top energy and urban solutions provider had emerged as the lead contender to acquire Vector Green Energy, the Indian renewable energy platform of US private equity firm Global Infrastructure Partners (GIP).
On August 10, JSW Energy announced that it had agreed to buy a portfolio of 1,753 megawatt renewable energy generation capacity from Mytrah Energy India Pvt Ltd for Rs 10,530 crore. On May 20, Moneycontrol was the first to report that both parties had signed an exclusivity pact for the deal.
In October 2021, Adani Green Energy, the world's largest solar power developer, successfully completed the acquisition of SB Energy Holdings Ltd (SB Energy India) in an all-cash transaction which pegged SB Energy India at an enterprise valuation of $3.5 billion (Rs 26,000 crore), making it the largest acquisition in the renewable energy sector in India. In the same year, Adani Group chairman Gautam Adani announced that the Group would invest over $20 billion across the next 10 years in renewable energy generation.
The Continuum Angle
In July, Continuum, which is focused on building large, utility-scale wind and wind-solar hybrid (WSH) projects, said it had raised $350 million (about Rs 2,786 crore) in debt through a bond issue to expand its solar hybrid and wind projects. An additional $50 million was raised later.
"With these funds, the company aims to expand its portfolio to 2.5 GW, the majority of which are wind and solar hybrid projects, servicing commercial and industrial (C&I) consumers, enabling them to meet their sustainability goals economically," its founder and chief executive Arvind Bansal had said in July.
According to its website, as of 16 August, the firm had 1.3 GW of operating and near operational capacity and an additional 1.2 GW projects for near term construction.
Recently, GE Energy Financial Services (EFS), an arm of GE, said that it had acquired a 49 percent stake in Continuum Green Energy's 148.5-megawatt Morjar onshore wind project in Gujarat for an undisclosed sum
Over and above C&I clients, Continuum Green Energy also sells renewable energy to (a) three state-owned electricity distribution companies (discoms) of Gujarat, Maharashtra, and Madhya Pradesh and (b) Solar Energy Corporation of India Limited (SECI), according to its website.
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