New Delhi: After waiting in the wings six years for good-value assets, Brookfield is on the prowl for big ticket opportunities in India’s burgeoning renewable energy industry. ET NOW learns from sources, the Canadian marquee investment firm is eyeing controlling stake in operating assets in the renewable sector.
“Brookfield is looking to set up an India focused renewable energy platform. It is ready to commit over $1 bn for controlling stake in operating green projects across wind and solar segments,” said a source on condition of anonymity.
This was also hinted at during an earnings call earlier this month. “Indian market is really well-suited for our type of business. Because with scale, with capital efficiency, with the ability to do M&A and development, and obviously, the expertise we have from an operation and maintenance perspective, we think we can acquire well, and then we can improve assets,” Sachin Shah, Managing Partner, Brookfield Renewable.
Giving a sense of what Brookfield anticipates in valuations and return on investments, Shah went on to say, “In India, we’ve been discussing opportunities over the last number of years & generally have remained patient as valuations remain high…If we were to invest in the country, we’re targeting north of 15% USD returns with the path to 20%.”
Brookfield is yet to revert to ET NOW’s queries.
Debt crisis at IL&FS stoked liquidity constraints in the sector, explaining the drop in valuations. Add to this debt woes, that has prompted many promoters to consider selling out. Take for example, Mytrah Energy that owes around Rs 1,800 crore to Piramal Group. In fact, reports suggest Brookfield has evinced interest to acquire majority stake in this Hyderabad based company for about $1 billion. Mytrah Energy operates 1.6 GW of renewable projects across nine states including Rajasthan, Maharashtra, and Karnataka.
To be sure, the renewable energy sector has seen a spate of big ticket deals last couple of years. Last year ReNew Power acquired 1.1 GW portfolio of Ostro Energy for $1.54 billion. In 2016, Tata Power Renewable Energy bought Welspun Renewables’ 1.14 GW portfolio for $1.4 billion. Piramal Enterprises recently signed a pact with Canada Pension Plan Investment Board to set up an asset aggregation platform for renewables with an initial corpus of $600 mn.
Brookfield has invested close to $7 billion in India, mainly across real estate and infrastructure sectors. Clearly, renewable energy is fast emerging as the new focus area for Brookfield in months to come. Brookfield has over $350 billion assets under management globally. It has invested close to $47 billion globally in the renewable energy business across 930 power generating assets.