Sembcorp Industries is the third firm after Hero Future Energies and Greenko Group to show interest in buying Orange Renewable from AT Capital Group
New Delhi: Sembcorp Industries Ltd has evinced interest in buying clean energy producer Orange Renewable from Singapore-based AT Capital Group, according to a person aware of the development. If it goes through, the transaction will rank among India’s top deals in the renewable energy space.
Singapore-based Sembcorp, which plans to list its Indian unit, is at least the third firm to show interest in Orange’s portfolio, which has been up for sale for some time now. The other two are Hero Future Energies and Greenko Group.
Rothschild has been hired to find a buyer. Mint reported on 14 November about Greenko Group and Hero Future Energies being in separate talks to acquire Orange, with an operational capacity of 758 megawatts (MW).
“Sembcorp Industries is now interested in Orange Renewable and is conducting due diligence,” said the person cited above, requesting anonymity.
Sembcorp, with total assets of over SG$23 billion, has around 4,000MW of projects under operation and development in India across conventional and clean energy sources. It is one of the few foreign utilities that owns thermal power assets in India. Others include American firm AES and Hong Kong-based CLP Holdings.
Mint also reported on 3 January about Hero Future Energies emerging as the front-runner to acquire Orange Renewable.
“Hero Future Energies remains interested in Orange Renewable,” said a second person, who also did not wish to be named.
The portfolio of Orange Renewable, founded by Arvind Tiku, an India-born Singapore resident, is made up of 567MW of wind projects and 191MW of solar plants.
“India is one of Sembcorp’s key markets. We are constantly on the lookout for suitable opportunities here and elsewhere which make sense for our shareholders. However, as a policy, we do not generally comment on specific opportunities,” said a Sembcorp spokesperson in an emailed response.
These discussions come after AT Capital Group’s differences over valuation with ReNew Power Ventures Pvt. Ltd for the same assets.
The Economic Times reported on 19 July about ReNew Power being in active discussions with Orange Renewable to acquire its portfolio at an enterprise value of Rs6,175 crore.
The initial public offering by Sembcorp India, which has thermal and renewable power assets in the country, is being planned at a time when India’s green energy tariffs have hit a record low.
In such a scenario, obtaining finance at the lowest cost has become a key to success. Sembcorp on its part has been placing aggressive clean energy bids. It bid Rs2.44 per kilowatt-hour (kWh) as tariff last month to win wind power contracts for 300MW. While queries emailed to Tiku and a Hero Future Energies spokesperson on 16 February remained unanswered, Sudhir Nunes, chief executive officer, wind business at Orange Renewable, in an emailed response, said, “As mentioned before, we are unable to comment on market speculation.”
AT Capital Group’s portfolio includes investments in real estate, hospitality, natural resources, renewable energy, engineering and construction.
An external spokesperson for Rothschild Global Advisory (India) also declined comment.
Sembcorp in 2010 made its first power sector investment in India, when it acquired a stake in Gayatri Energy Ventures’ Thermal Powertech Corp. India, a 1,320MW thermal power plant.
In February 2015, Sembcorp Industries acquired a 60% stake in IDFC Alternatives Ltd-backed renewable energy firm Green Infra Ltd for S$227 million, marking its entry into the Indian renewable energy market. In August 2017, Sembcorp Industries announced the acquisition of IDFC’s remaining 28% stake in SGI (Sembcorp Green Infra) for Rs1,410.2 crore to become its sole owner.
Sembcorp is now reorganizing its India energy operations under Sembcorp Energy India Ltd.