Mytrah Energy in talks with large funds to raise growth capital, says vice-chairman and managing director Vikram Kailas
New Delhi: Mytrah Energy (India) Pvt. Ltd is in talks with potential investors to raise $500 million by selling a stake in the company. If successful, the transaction will be one of the biggest in India’s clean energy industry.
“We will raise growth capital,” Vikram Kailas, vice-chairman and managing director of Mytrah Energy, said in an interview. Kailas, who co-founded the renewable energy firm, said Mytrah Energy was in talks with large funds, but did not name them.
While 78% of the Mytrah Energy is owned by promoters and family, the balance 22% is held by investors including Capital Group, Blackrock and Henderson. Mytrah has built an operational renewable energy portfolio of around 1,600 megawatts (MW) and plans to reach 2,000MW in four months.
“It’s a great time to be in this industry,” Kailas said. “We are talking to large funds. They are people who don’t want a quick exit.”
There is growing overseas interest in India’s clean energy programme, with the government targeting 175 gigawatts (GW) of clean energy capacity by 2022.
Of this, 100GW is to come from solar projects. The interest in the renewable energy space also seems to be buoyed by government think-tank NITI Aayog’s projection of a 597-710 gigawatt (GW) production capacity by 2040 in its new draft energy policy.
“Because there is a huge growth opportunity. Typically, we are doing 300 to 500MW on a year-on-year basis. Now, I want to do 1,000-1,500MW year on year,” Kailas said, explaining the rationale behind the fund-raising.
In September, the company raised $277 million from Piramal Group.
The proceeds were used to buy out the stakes of existing investors IDFC Alternatives Ltd, AION Capital, Merrill Lynch and Goldman Sachs, as well as to fund the growth of the company.
India’s green energy tariffs have hit a record low, making access to cheap funds a key criterion for success.
This has resulted in the quest for so-called patient capital, which seeks modest yields over time. Mytrah Energy, which listed on AIM on October 2010 after raising $80 million from institutional investors, has 16 operational wind power projects across eight states of Rajasthan, Gujarat, Madhya Pradesh, Maharashtra, Andhra Pradesh, Telangana, Karnataka and Tamil Nadu. The firm is also developing solar projects in Telangana, Punjab and Karnataka.
Consolidation is growing in the Indian clean energy space. Some of the deals in the works as reported by Mint include Greenko Group, Hero Future Energies and Sembcorp Industries Ltd’s interest in buying clean energy producer Orange Renewable from Singapore-based AT Capital Group; global private equity firm Actis Llp exploring the sale of Ostro Energy Pvt. Ltd to ReNew Power Ventures and CDC Group Plc-backed Ayana Renewable Power, a clean energy firm operating in India and neighbouring countries.
Among other deals lined up are Royal Dutch Shell Plc’s plans to acquire a majority stake in Hyderabad-based rooftop solar firm Fourth Partner Energy; Taaleri Plc’s purchase of a stake in Finland’s state-controlled power utility Fortum Oyj’s operational Indian solar power projects; and Subhash Chandra’s Essel Infraprojects Ltd mandating Investec, an investment bank, to find a buyer for its solar business.
Also, diversified conglomerate Shapoorji Pallonji Group is in stake sale talks for its solar portfolio.