Mumbai: Abu Dhabi’s Masdar Clean Energy has entered into exclusive talks to acquire a 30-35% stake in Hero Future Energies.
The renewable energy arm of the Munjal family’s Hero Group has been looking for a strategic investor to back the company’s expansion into global markets. It targets raising $300-350 million from the stake sale, two people aware of the development said.
JP Morgan is advising the company in the stake sale process.
Hero MotoCorp Ltd.-11.45 (-0.41%)
Leading Asian energy producers including Petroliam Nasional Berhad (Petronas) of Malaysia, Masdar and Singapore’s Sembcorp are in separate discussions to acquire a minority stake in Hero Future Energies, ET had reported in October.
Started in 2012, Hero Future Energies is led by Rahul Munjal, the eldest son of Hero MotoCorpNSE -0.41 % Ltd.’s founder late Raman Munjal. International Finance Corp., the private sector investment arm of the World Bank, invested $125 million for a minority stake in Hero Future in 2017.
Hero Future has 1,200 MW of installed solar and wind power, with 500 MW being built and 300 MW in the pipeline. The company has a presence in 10 Indian states across wind, grid-connected solar and rooftop solar projects and plans to build a portfolio of 3.5 GW by 2022.
Mails sent to Masdar and Sunil Jain, CEO of Hero Future, did not elicit any responses till press time.
Hero Future is considering expanding into markets in South East Asia and Africa and plans to rope in a global player with the expertise, said one person.
Masdar, wholly owned by Mubadala Investment Company, the strategic investment company of the government of Abu Dhabi, is also on an acquisition spree, targeting new markets.
Masdar announced its entry into North America on January 15 by acquiring John Laing Group plc’s stake in two wind farms – Rocksprings in Texas and Sterling in New Mexico.
In 2018, Masdar had acquired a 49% stake in the 72 MW onshore Krnovo wind farm in Montenegro, from the wind park’s developer Krnovo Green Energy, a unit of French clean energy producer Akuo Energy.
Masdar’s renewable energy projects are located in the UAE, Jordan, Mauritania, Egypt, Morocco, the UK, Serbia and Spain. Masdar has invested about $2.7 billion in projects globally over the past 10 years, delivering more than 1.3 GW of solar power and 1.4 GW of wind energy annually.
Besides Masdar, Malaysia’s Petronas is keen on an entry into India and has begun discussions to acquire a majority stake in Amplus Energy Solutions, a leading rooftop solar power producer backed by New York-based I Squared Capital.
Rating company Icra, which has a stable outlook for India’s clean energy sector, expects a capacity addition of 10 GW of renewable energy in the year ending March 2020.
India currently has about 72 GW of installed renewable energy capacity, including 34 GW of wind and 23 GW of solar, which is equivalent to 20% of the country’s total installed power capacity. The government is targeting a renewable energy capacity base of 175 GW by 2022, of which 100 GW will be solar and 75 GW wind.