The proposed deal is valued at around $200 mn and the sale process is being run by Avendus Capital
European alternative asset manager EQT and Temasek promoted O2 Power and CDC Group Plc-backed Ayana Renewable Power have emerged as the front-runners to acquire 305 MW solar assets of NYSE-listed Azure Power Global, said two people aware of the development.
The potential deal is valued at about $200 million, with the sales process for International Finance Corporation (IFC) and Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ) backed Azure Power’ assets being run by Avendus Capital.
This comes against the backdrop of EverSource Capital’s plan to buy out the entire 167 MW solar rooftop portfolio of Azure as reported by Mint earlier, in what may rank among the largest solar rooftop deals in India.
Investors’ interest in India’s green energy space continues, with the country’s electricity demand catching up with pre-covid levels. Also, an expected strong electricity demand growth trajectory, due to efforts such as leveraging power for cooking, are attracting investors. India aims to have 175 GW of clean energy capacity by 2022, including 100GW from solar projects.
Mint earlier reported about private equity investors KKR and Actis Plc in talks to acquire these solar assets, with others such as Ayana, O2, Brookfield and Edelweiss also having shown interest in the same.
Nathan Judge, head of investor relations, Azure Power, in an emailed response declined comment.
Shivanand Nimbargi, managing director and chief executive officer of Ayana Renewable Power declined comment.
Queries emailed to an O2 Power spokesperson on late Thursday evening remained unanswered.
An Avendus Capital spokesperson in an emailed response , “As a matter of policy, we do not comment on queries of this nature.”
Azure Power has a 7 GW portfolio. The World Bank’s private sector development arm International Finance Corporation (IFC) and German development finance institution Deutsche Investitions- und Entwicklungsgesellschaft (DEG) are among the other investors in Azure Power, India’s first renewable energy company to list on the US stock market.
“O2 Power and Ayana are the final ones left, with the deal expected to be announced shortly. The deal is expected to have an enterprise value of upwards of $200 million,” said one of the two people cited above requesting anonymity.
O2 Power is a $500-million renewable energy platform in India that is targeting around 4 GW of solar and wind assets. Founded by former ReNew Power executives—Parag Sharma, Peeyush Mohit, Rakesh Garg and Nimish Agrwal—O2 Power has already bagged a 1 GW portfolio.
““Actis isn’t interested in these (Azure Power) assets now,” said a second person cited above who also did not want to be named.
Ayana’ focus areas are the Indian states of Bihar, Odisha and Assam, and South Asian countries such as Bangladesh, Nepal, Myanmar and Sri Lanka. It recently placed the third lowest bid of Rs2.38 per unit each during an auction conducted by state-run Solar Energy Corporation of India Ltd (Seci) that saw India’s solar power tariffs hitting a record low of Rs2.36 per unit. According to information available on its website, it has an 800 MW solar portfolio in Andhra Pradesh and Rajasthan.
The deal activity in India’s clean energy space continues unabated despite being impacted by the coronavirus pandemic and issues such as power procurement curtailment, tariff-shopping by distribution companies (discoms) and unavailability of lenders. Also, payments delay and transmission and connectivity related challenges persist.
Some of the deals in play as reported by Mint include Canada Pension Plan Investment Board, Actis Llp and Brookfield Asset Management Inc. looking to buy Japan’s SoftBank Group Corp’s stake in SB Energy Holding, that has a 7.7 GW Indian solar portfolio.
Also, in what may rank among the largest green energy deals in India, Acme Solar Holdings Ltd. is looking to sell 4.84 GW of solar projects. Malaysia’s state-run oil and gas company, Petroliam Nasional Bhd, or Petronas, is also looking to acquire around 10% stake in Tata Power Renewable Energy Ltd, in addition to investing in Tata Power’ renewable energy infrastructure investment trust (InvIT).
Japan’s ORIX Corp. recently made the single-largest foreign clean energy investment announcement of $980 million in India for buying a 17% stake in Greenko Energy Holdings.