Greenko Group is back in the running to buy Orange Renewable from Singapore’s AT Capital Group for about $925 million
Mumbai: Greenko Group is back in the running to buy Orange Renewable from Singapore’s AT Capital Group for about $925 million, in what may rank among the biggest ever deals in India’s renewable energy space, said two people aware of the development. An official announcement on the deal is likely to be made shortly, said the two people, who did not wish to be named.
Greenko Group, backed by sovereign wealth funds GIC Holdings Pvt. Ltd and Abu Dhabi Investment Authority, had in June agreed to acquire Orange Renewable at an enterprise value of around $1 billion. Hyderabad-based Greenko, however, later called off the deal. New Delhi-based Orange Renewable was founded by Singapore resident Arvind Tiku.
“Greenko-Orange deal is going through,” said one of the two people cited above, requesting anonymity.
Another person aware of the development, who also didn’t want to be named, confirmed the potential deal, which has been on and off the table.
On 11 September, Mint reported on investment bank Rothschild Inc. resuming the process of scouting for a buyer for Orange. The deal is now close to fruition at a discount of around $75 million, with Greenko slated to make an equity payout of around $300 million.
There has been growing overseas interest in India’s emerging green economy with the country’s plan to meet 40% of its electricity needs from non-fossil fuels by 2030. With around $42 billion invested so far, India’s renewable energy capacity has doubled to 72 gigawatts (GW). This is a time when India is pursuing its aim of adding 175GW of green energy by 2022.
Once the Orange transaction is completed, Greenko’s total renewable energy operational capacity will increase by around 1GW to 4.2GW, the second largest in India after ReNew Power Ventures Pvt. Ltd.
Greenko Group’s founder, president and joint managing director Mahesh Kolli declined to comment. Arvind Tiku didn’t immediately respond to queries emailed on early Sunday morning.
An external spokesperson for Rothschild, in an emailed response, said the investment bank “does not comment on market speculations”.
GIC Holdings Pvt. Ltd and ADIA will invest a combined $395 million in Greenko Energy Holdings in one of the largest funding rounds by an Indian clean energy producer, Greenko said in June.
While GIC and ADIA hold 60% and 14%, respectively, in Greenko, founders Kolli and Anil Kumar Chalamalasetty, chief executive and managing director, together hold 26%. GIC and ADIA have invested $1.5 billion so far in Greenko Group.
“The deal is accretive to Greenko’s Ebitda (earnings before interest, tax, depreciation and amortization) upon closing, approximately $130 million accretive in the first full year after close, with additional accretion and growth anticipated thereafter,” Greenko said in a 4 June statement on the Orange deal.
Orange Renewable was earlier in talks with many suitors, including ReNew Power. The talks collapsed because of differences over valuation between ReNew Power and AT Capital.
“Greenko intends to increase the installed capacity by developing and building new greenfield assets, as well as making selective acquisitions which enhance shareholder value,” the statement added.