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Weeks after the acquisition of Softbank Energy by the Adani Group for a record $3.5 billion, the stage seems set for yet another mega-deal in the Indian clean energy segment.
Hyderabad-based Mytrah Energy has approached a clutch of strategic and private equity investors as it revives plans to sell its solar and wind portfolio and address its debt concerns, people with knowledge of the matter told Moneycontrol.
“Internally, the firm is expecting a cheque size of $2.1 billion to $2.3billion, or Rs 16,000 crore to Rs 17,000 crore, for the combined portfolio, but these are early days and the deal structure and valuations will be finalised later based on negotiations with suitors, ” said one of the persons cited above.
“The transaction has been launched recently by investment bank Barclays and teasers have been sent to multiple parties in the industry. This is a renewable energy portfolio of sufficient size and scale and there aren’t many large assets like this on the block, hence there will be strong interest,” said one of the persons cited above.
A second person said the likes of Adani Group, KKR, CPPIB, CDC-backed Ayana Renewable Energy and Renew Power are amongst early-stage suitors who have expressed preliminary interest in this deal. "Some parties may not be keen on the entire portfolio and may focus on a specific portion or bucket, ” this person said.
He added that feelers have been sent to a few other conglomerates with a presence in the power segment, including the JSW Group.
“The combined size of the portfolio up for sale is around 1.7 GW, a major chunk of which is wind and a smaller portion falls in the solar segment,” a third individual elaborated.
A fourth individual also confirmed the revived asset sale plans.
Mytrah Energy owes more than Rs 2,000 crores in mezzanine debt ( a form of financing that is part debt and part equity) to the likes of Piramal Group & APG Asset Management.
All four persons spoke to Moneycontrol on the condition of anonymity.
Moneycontrol is awaiting an email response from Mytrah Energy, Ayana Renewable Energy and Renew Power and will update this article as soon as we hear from these firms. KKR, CPPIB, JSW Group and Barclays declined to comment.
In response to a query from Moneycontrol, an Adani Group spokesperson said: “As a part of the company’s business growth strategy, we continue to evaluate various viable options. The company however doesn’t comment on speculations.”
Mytrah Energy’s assets are spread across 17 wind farms and 21 ground monitored solar farms in 9 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 Power Purchase Agreements. In addition, its 100.5 MW project in Tamil Nadu sells power directly to Industrial consumers on short-term agreements.
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According to its website, the firm has the largest wind data bank in India, being the only independent power producer having a pan India presence of over 240 wind masts.
Speaking on recent M&A trends and the ground situation in the clean energy segment, Rahul Goswami, Managing Director, Greenstone Advisors said, "Acquisition interest in renewable portfolios has increased dramatically. Key drivers include the inability of groups to deploy meaningful capital over the past two years due to delays in PSA signing and delays in execution due to the pandemic. Moreover, increasing module pricing and raw material costs have deteriorated the value of projects allocated over the past year.”
“As a result, the ability to deploy capital through acquisitions of operating portfolios makes increasing strategic sense as costs are already crystallized and timelines for capital deployment are shorter,” Goswami added.
RENEWABLE SECTOR: GEARING UP FOR A FLURRY OF DEALS
In February, 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, the pro forma consolidated & 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 (special purpose acquisition company) route, which has gained immense popularity over the last year on Wall Street.
Then in April, after prolonged negotiations, the Tata group called off its InvIT ( infrastructure investment trust) deal for listed group company Tata Power which was being pursued with Malaysia’s Petronas.
The $3.5-billion Adani-SoftBank Energy deal struck in May 2021 is the biggest ever acquisition in the domestic renewable energy sector.
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After the deal announcement, Gautam Adani, Chairman, Adani Group had said: “This acquisition is another step towards the vision we stated in January 2020, wherein we laid out our plans to become the world’s largest solar player by 2025 and thereafter the world’s largest renewable company by 2030.”
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 recent deal activity. Reports indicate 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.