CDPQ set to buy 40% in CLP’s India arm
MUMBAI: Canadian pension fund manager Caisse de dépôt et placement du Québec (CDPQ) agreed to acquire a 40% in CLP India for $368 million (Rs 2,645 crore), valuing the latter at $920 million.
The deal that ends months of negotiations is the largest fundraising through private investment in the Indian renewables sector.
CLP India is the wholly-owned arm of Hong Kong-listed CLP Holdings (formerly China Light & Power) and is one of the largest foreign investors in the Indian power sector.
The parent will retain 60% in the Indian arm. Proceeds will be used to expand portfolio in lowcarbon areas. The transaction is subject to regulatory approvals.
“The Indian market has been, and will continue to be, a primary growth market for CLP and CDPQ,” said a CLP statement to the Hong Kong stock exchange.
“Both are aligned on the strategy for CLP India and it is envisaged that with the strategic backing and financial support of both shareholders, CLP India will pursue a faster path of growth to a long-term sustainable business with a diversified portfolio.
It will seek to expand investments in low-carbon growth areas, including renewable energy, as well as non-generation business opportunities in transmission, distribution and other customer-focused business.”
ET was first to report this impending transaction, on March 14. CLP entered India in 2002 with acquisition of a 655-mw gas-fired plant in Gujarat and has since expanded its portfolio of operating conventional and renewable assets to over 3 gigawatts, making it one of the largest in the space in India.
While sections of the senior management in Hong Kong have been bullish on India, the parent’s board has not been willing to infuse additional equity to fund growth, sources said. CLP India was in the race to acquire Anil Ambani’s Mumbai distribution business for over $2 billion but had to eventually withdraw.
The proceeds from the CDPQ deal will largely be used to fund acquisitions and bulk up the portfolio in generation as well as transmission and distribution.
The pension fund manager has been evaluating the Indian power sector for a while now. It wanted to fund Tata Power’s Welspun acquisition and formed an $850 million joint platform called Resurgent Power Ventures with Tata, ICICI Venture, Kuwait Investment Authority and State General Reserve Fund of Oman to acquire distressed thermal power assets.