Race for Mytrah Energy assets: JSW Group signs exclusivity pact; deal valued between $1.6 billion and $1.7 billion

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In yet another instance of a big-bang deal brewing in the Indian clean energy segment, Sajjan Jindal-led JSW Group has signed an exclusivity agreement with Hyderabad-based Mytrah Energy to buy the latter’s wind and solar assets, multiple industry sources with knowledge of the development told Moneycontrol.

“There was a lot of interest from both global and strategic players as well as funds for this transaction as it’s a portfolio of sufficient size and scale and there aren’t many such assets up for grabs in the market. Mytrah Energy has signed an exclusivity pact with JSW Group which wants to purchase the entire portfolio,” one of the persons cited above told Moneycontrol.

A second person told Moneycontrol that JSW Group had edged ahead of other suitors and that the enterprise value of the deal was likely to be between $1.6 billion and $1.7 billion. He added that JSW Energy, the likely acquiring entity, was keen to bolster its green energy footprint. Mytrah Energy has 1.7 GW of operational wind and solar assets.

A third person also confirmed that JSW Group was the frontrunner to acquire Mytrah Energy's assets.

Moneycontrol had reported on the early stages of the deal post its launch on July 5, 2021. The report had added that investment bank Barclays was handling the sale process.

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

In response to an email query from Moneycontrol, a JSW Energy spokesperson declined to comment. Moneycontrol could not elicit an immediate response from Mytrah Energy and will update this article as soon as we hear from the firm. Phone calls to the management remained unanswered at the time of publishing this report.

Mytrah Energy, which had toyed with the idea of a US SPAC
(special purpose acquisition company) listing earlier, owes more than Rs 2,000 crore in mezzanine debt (a form of financing that is part debt and part equity) to the likes of Piramal Group and APG Asset Management.

According to an earlier report by Mint, Singapore-based energy major Sembcorp and Miami, USA-headquartered Enfinity Global had also been shortlisted for the final round of the sale process for Mytrah Energy’s assets.

THE MYTRAH FOOTPRINT

In March 2022, in a big boost for the renewable energy sector, the Andhra Pradesh High Court reinforced the sanctity of power purchase agreements (PPAs) struck between wind and solar independent power producers and state discoms. The verdict gave a liquidity boost to local players like Mytrah Energy.

According to the Moneycontrol report dated July 5, 2021, Mytrah Energy’s assets are spread across 17 wind farms and 21 ground-monitored solar farms in nine states – Punjab, Rajasthan, Gujarat, Madhya Pradesh, Maharashtra, Karnataka, Telangana, Andhra Pradesh and Tamil Nadu. It sells power mainly to state grids through 13 to 25-year PPAs. In addition, its 100.5 MW project in Tamil Nadu sells power directly to industrial consumers on short-term agreements.

According to the firm’s website, it has the largest wind data bank in India, being the only independent power producer having a pan-India presence of over 240 wind masts.

INDIAN CLEAN ENERGY SECTOR: RED HOT FOR M&A

The domestic renewable energy segment has been buzzing with M&A activity for the past two years. “It’s a very active and fragmented sector and players want to exit or recycle capital. It has also caught the global fancy of ESG (environmental, social and governance) over the last 12 months,” said an industry executive on condition of anonymity.

In April, Tata Power announced that a consortium consisting of Blackrock and Mubadala would pump in Rs 4,000 crore in the former’s renewable energy arm.

The year 2021 saw the acquisition of Softbank Energy by the Adani Group for a record $3.5 billion. Earlier in the year, French energy major Total struck a $2.5-billion deal with the Adani Group via a combination of JV and stake-buy with Adani Green Energy. In February 2021, top domestic player ReNew Power and RMG Acquisition Corporation II announced the execution of a definitive agreement for a business combination that would result in ReNew becoming a publicly listed company on the NASDAQ.

According to the official announcement by ReNew Power, the pro forma consolidated and fully diluted enterprise value of the transaction was approximately $8 billion. This was a landmark transaction as it represented the first major overseas listing of an Indian company via the SPAC route, which has gained immense popularity over the last year on Wall Street.

Actis Llp’s purchase of 500MW of solar projects in India from Finland’s state-controlled power utility Fortum Oyj for around €280 million is another example of deal activity in the sector. Reports have also indicated that Morgan Stanley’s majority stake in Continuum Wind Energy is up for grabs as well after the likes of US firm SunEdison Inc and Norway’s Statkraft had earlier expressed interest in the asset.

The Indian government has set an ambitious renewable energy target to achieve 175 GW by 2022 and 450GW by 2030 as part of its climate commitments.