Adani Group’s renewable energy arm is seeking to raise external equity capital after having pumped in millions of dollars of its own money to build a pipeline of projects worth over 2 gigawatts (GW), two people aware of the development said. The proposed fundraising could see Adani’s renewable arm—Adani Green Energy Ltd—raise as much as $200 million (about Rs1,300 crore), said one of the two people cited above, requesting anonymity, as the talks are private. “They have been holding talks with various investment banks over the last couple of months for the same. So far, the group has self-funded the renewable business and has invested approximately Rs1,800-1,900 crore (close to $300 million) into the business,” the person said, adding that the group is looking to dilute around 30% in the business.Adani Green Energy will end up having an operating capacity of close to 2GW by end of the June quarter, said the second person cited above, also requesting anonymity.
“The equity fundraise and subsequent debt that the company will be able to raise on top of that will enable it to develop almost another gigawatt of capacity. Given the quantum of fundraise they are looking at, it is likely that they will tap sovereign funds and pension funds, which have been actively scouting opportunities in India,” he added. As per an earnings press release of Adani Enterprises dated 14 February, the group’s renewable business had operational projects of 760 megawatts (MW) of solar and wind power. Another 1,414MW of wind and solar power projects are under various stages of implementation across the country, the statement added.
The Adani renewable business has developed a few marque projects such as a 648 MW single location solar park in Tamil Nadu, the world’s largest single location project, and a 100MW project in Punjab, which it claims to be the largest project in the country with Single Axis Tracking technology. An email sent to Adani Group on Thursday enquiring about its renewable business’ fundraising plans was not answered. Adani, however, isn’t the first major corporate house that is looking to raise external capital to fund its renewable business. In October 2015, Aditya Birla group announced a partnership with Dubai-based private equity firm Abraaj Group to build a renewable energy platform with a focus on developing solar power plants. Last year, Ajay Piramal-controlled Piramal Enterprises Ltd and Dutch pension fund asset manager APG Asset Management committed to jointly invest $132 million in Essel Infrastructure Ltd’s solar platform.
Deep-pocketed investors such as pension funds and sovereign wealth funds, attracted by the scale of the renewable opportunity in India, have backed large renewable platforms in recent years. In March, power minister Piyush Goyal said the country will add 15GW of solar power capacity by June 2018. The Narendra Modi government is targeting to achieve renewable energy capacity of 175GW by the year 2022. Those that have already placed bets in India include Singapore sovereign fund GIC Pte Ltd, Abu Dhabi Investment Authority and Canadian pension fund Caisse de dépôt et placement du Québec.