Abu Dhabi Future Energy Company, also known as Masdar, will invest $150 million (Rs 1,073.4 crore at current exchange rate) for a minority stake in Munjal family-led Hero Group’s clean energy arm.
In its statement, Hero Future Energies said the investment by Masdar will facilitate the company’s expansion in India and other key growth markets. Last month, a filing with the Competition Commission of India said that Masdar was planning to subscribe to equity shares in Hero Future Energies Global Ltd and non-voting compulsorily convertible preference shares in Hero Future Energies.
According to reports last month, the Abu Dhabi-based company will own 20% of Hero Future Energies after its investment, while World Bank’s International Finance Corporation (IFC) will hold 27%, with the remaining being held by Hero Future Energies’ promoters.
Masdar focuses on providing solutions in energy, water and urban development and clean technologies. It develops renewable energy projects in West Asia and North Africa, according to its website.
Hero Future Energies is backed by Hero Group, a diversified conglomerate run by the Munjal family. The group’s flagship is Hero MotoCorp Ltd, India's largest two-wheeler maker. The family owns a majority stake in Hero Future Energies, while IFC and its infrastructure fund are also significant shareholders.
The minority acquisition by Masdar will come after the IFC in April 2019 offered to provide debt financing of up to $43.3 million (Rs 300 crore) for the construction of a 250-megawatt project at Bhadla in Rajasthan. In 2016, IFC and its Global Infrastructure Fund had said each planned to invest $62.5 million in the renewable energy company.
The investment will also come as the larger renewable energy segment in India continues to see heavy interest from both alternative and strategic players, especially considering the government’s target to achieve a renewable energy capacity of 260 gigawatts (GW) by 2024. The country’s renewable power capacity soared by almost 150% in the last five years to 77.6 GW, while the government set a target of 175 GW by 2022.