- GIP, which raised the world’s biggest infrastructure fund at $22 billion in December, acquired the platform from IDFC Alternatives in 2018 as part of its India entry
- The platform owns around 750 MW of renewable assets
US-based Global Infrastructure Partners (GIP) is planning to sell its Indian renewable energy platform Vector Green Energy, two people aware of the development said, after the coronavirus outbreak upset its plans to sell its local roads portfolio.
GIP, which raised the world’s biggest infrastructure fund at $22 billion in December, acquired the platform from IDFC Alternatives in 2018 as part of its India entry. The platform owns around 750 MW of renewable assets.
The portfolio could fetch a valuation of $500-600 million, said the first of the two people cited above, both of whom spoke on condition of anonymity. “GIP has initiated talks to appoint investment banks to sell off the entire portfolio of around 750 MW owned by the Vector Green platform. They are having talks with several banks and are expected to soon appoint a banker to start the sale process,” this person said.
GIP’s plans to exit its renewable portfolio comes after a planned sale of its roads portfolio—Highway Concession One—stalled due to the covid-19 pandemic and the subsequent lockdown, which disrupted road traffic and the revenue earning potential of the toll road portfolio.
Mint reported on 13 May that Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ) had put on hold its planned purchase of a portfolio of seven toll roads from GIP, the Canadian investor’s first acquisition of a roads portfolio in India.
CDPQ had last year agreed to buy Highway Concessions One, a portfolio of seven toll road assets, from GIP for about ₹2,400 crore.
The delay in sale of the roads portfolio has prompted GIP to seek a sale of its renewable assets, as the investor wants to show exits from its Indian investments ahead of efforts to raise an India-dedicated fund, said the second person cited above.
“GIP wants to raise at least $1 billion for its India fund. They wanted to sell their roads to show investors an exit, which would help them significantly in raising their fund. Most deals in the roads sector are struggling to achieve closure due to the lockdown and expected fall in traffic due to the economic slowdown, while the renewables sector is seeing a lot of buyer interest. Hence, they have switched their focus on selling the renewable platform,” he said.
“As a matter of policy, we don’t comment on market speculation,” GIP said in an email response.
M&A activity in the Indian renewable energy sector has picked up recently, with many large portfolios on sale. Investors are looking for infrastructure assets that have fixed contracts such as renewables and transmission lines, rather than buying assets linked to the markets, such as toll roads.
Mint reported on Monday that private equity investors KKR and Actis are in talks to acquire a solar portfolio of 435 MW from CDPQ-backed Azure Power Global Ltd.
Finland’s state-controlled power utility Fortum Oyj is also looking for buyers for its 500MW Indian solar projects, Mint reported on 1 June. At least six firms—Canada Pension Plan Investment Board (CPPIB), Brookfield Asset Management Inc., PE firms Actis, KKR, Macquarie Group and Edelweiss Infrastructure Yield Plus Fund—have evinced interest in taking a majority stake.
Saudi Arabia’s Alfanar Group is looking to sell half of its 600MW wind power projects in India, Mint reported in May.