Japan’s Orix set to make $1 billion bet on Greenko

Mumbai: Japan’s Orix Corporation is in advanced talks to invest about $1 billion for a 15-17% stake in Greenko Energy Holdings, said three people aware of the negotiations, in what would be the single-largest foreign investment in India’s renewable energy sector till date.The investment is expected to be made through a combination of primary and secondary sale of shares at an equity valuation of about $6 billion, making the unlisted Hyderabad-based Greenko the second most valuable clean energy utility in the country, after Adani Green Energy. Greenko’s enterprise value, including $4.2 billion debt, would be about $10 billion, the people said on condition of anonymity because the talks are still private.As part of the transaction, NYSE-listed Orix’s existing 873 MW wind portfolio acquired last year from bankrupt shadow lender IL&FS will be merged into Greenko.GIC to Remain Largest StakeholderThis will take Greenko’s capacity to about 6,500 MW, with an additional 8 GW of integrated renewable energy projects in various stages of construction.Orix competed with Warren Buffet’s Berkshire Hathaway Energy and Canadian pensioners Omers, said another official. Even state-backed Chinese investment fund CNIC Corp had made a non-binding bid but those negotiations were scuppered because of geo-political tension between the two countries.After the expected transaction, GIC of Singapore will remain the largest shareholder with a 55% stake in Greenko, down from 65.8% currently, while Abu Dhabi Investment Authority will control 15-16%. First-generation entrepreneur duo Anil Kumar Chalamalasetty and Mahesh Kolli, who started the venture in 2006, will be left with a 13-14% shareholding. An announcement is expected later this week. Greenko and Orix did not respond to emails seeking comment. Bank of America is believed to be the advisors in the deal. 78051274PIVOTING TO STORAGE“From an independent power producer that started with small projects with feed-in tariffs, Greenko has pivoted towards energy storage, battery solutions and has been charting an evolutionary path more as an energy solutions provider. This latest round will help it with funds for that next phase of growth,” said an analyst familiar with the company’s plans.ET reported in its August 17 edition that Greenko was the frontrunner to acquire US-based large-scale battery installer NEC Energy Solutions at an enterprise valuation of $300-400 million – its first cross-border acquisition – to access cutting-edge technology in lithium-ion batteries and enter the global market. Due diligence for the NEC Energy acquisition is under way.Last month, Greenko tied up with state-owned NTPC to help the national utility with the largest footprint of coal-fired plants access clean energy during peak grid demand.Greenko has approvals to build power storage projects with a total capacity of 7.2 GW across six states in India. As part of that, it plans to build integrated green energy projects combining pumped storage with solar and wind projects. Two such projects are already under way with a combined capacity of 2.4 GW, requiring a total investment of $2 billion, supported by equity commitment (25% of the project value) from shareholders.The company has raised foreign capital from marque global investors to the tune of $2.5 billion till date, of which $1 billion was committed by GIC and ADIA last year.“The majority of Greenko’s assets benefit from long-term power purchase agreements, which offer tariff visibility,” Rachna Jain and Girish Madan, analysts with Fitch Ratings, said in a report in July. “Greenko's better credit assessment than ReNew is supported by its stronger financial access, which enables the company to rely on fresh equity for investments and acquisitions, while utilising cash generated from operations to deleverage. Greenko's focus on pumped storage projects, which have a long gestation period of about three years, will increase financial leverage in the medium term.”Orix has been a shareholder in IL&FS. In 1995, it entered India in the transportation and leasing solutions (rent-a-car) businesses and diversified into the NBFC space.

from Economic Times https://ift.tt/3ixrlqB
via IFTTT