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Actis-backed Ostro Energy strikes maiden deal for solar project

26 October, 2016

Ostro Energy Pvt. Ltd, the renewable energy platform set up by private equity firm Actis, has entered the solar power sector with a deal to acquire a stake in a project from Suzlon Energy Ltd.

Ostro has agreed to purchase 49% of Prathamesh Solarfarms Ltd, a Suzlon unit that is executing a 50-megawatt solar plant in Telangana, for Rs 49 crore ($7.3 million) in cash, Suzlon said in a statement.

Ostro will have an option to buy the remaining stake one year after the project starts commercial operations, Suzlon said. The project is likely to be commissioned in the current financial year.

The project is one of six with total capacity of 210 MW that Suzlon won in Telangana through a competitive bidding process; there are four other projects of 15 MW each and one of 100 MW.

Last week, Suzlon tied up with Nasdaq-listed Canadian Solar for two 15 MW projects and with China’s Unisun Energy for one 15 MW project. In June, Suzlon agreed to sell a 49% stake for the 100 MW project to CLP India Pvt. Ltd, a unit of Hong Kong Stock Exchange-listed CLP Holdings, for Rs 73.5 crore.

For Ostro, this is its first solar energy project. It already has six wind energy projects. Actis had set up Ostro early last year with committed investment of $230 million. Actis has now committed a total of $280 million for the platform, according to Ostro’s website.

In addition, Ostro secured debt funding of $177 million from International Finance Corporation, the World Bank’s private-sector arm, earlier this year. 

Ostro plans to build a portfolio of 1,000 MW of renewable energy projects by 2019 from 234 MW currently. It is also looking at constructing greenfield projects in addition to acquisitions.

Ostro joins another PE firm, IDFC Alternatives, in acquiring renewable energy assets. IDFC Alternatives, the asset management arm of infrastructure-focused lender IDFC Ltd, earlier this week agreed to buy three solar projects in Punjab and Rajasthan from engineering company Punj Lloyd Ltd.

Earlier this month, IDFC Alternatives inked a deal to buy the debt-laden Jindal Steel & Power Ltd’s wind energy unit.

IDFC Alternatives and Ostro are among a growing list of companies that are planning to ramp up their renewable energy portfolios after the Indian government set a 175-gigawatt target for green energy capacity by 2022. This includes 100 GW of solar and 60 GW of wind power capacity. India’s renewable energy capacity is currently around 44 GW.

Among the most significant deals in the sector, Tata Power Co. acquired Welspun’s renewable energy assets for $1.4 billion earlier this year.

Japan’s SoftBank Group Corp. is the most prominent foreign investor in India’s solar energy sector. SoftBank’s joint venture with Bharti Enterprises Ltd and Taiwan’s Foxconn Technology Group plans to invest $20 billion in India’s solar power sector.

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Actis-backed Ostro Energy strikes maiden deal for solar project

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