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Actis’ Sprng Energy acquires Shapoorji Pallonji’s solar energy business
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Sprng Energy, a renewable energy platform set up in India by British private equity firm Actis, has acquired the operating solar energy portfolio of Shapoorji Pallonji Infrastructure Capital Company Pvt. Ltd (SP Infra).

The transaction closed last week with all customary regulatory approvals in place, SP Infra said in a statement. The deal involves the sale of 194 megawatt of operating capacity, it said. It didn’t disclose the deal value.

The transaction increased Sprng Energy’s operating capacity to 450 MW and it will now focus on integrating these assets in its overall portfolio, Gaurav Sood, chief executive at Sprng Energy, said in the statement.

The acquisition is in line with the PE firm’s commitment of building renewable power projects with total capacity of two gigawatts in India, said Sanjiv Aggarwal, energy partner for Asia at Actis.

Aggarwal said the acquisition takes the total operating and under construction capacity of Sprng Energy to about 1,650 MW. “We continue to look for opportunities to grow this portfolio further through both M&A and new bids.”

Sprng Energy had earlier received a total of $450 million from the PE firm’s Actis Energy Fund IV to set up a 2 GW renewable power facility in the country.

The fund, which has total assets under management of $2.75 billion, invests in Latin American, African and Asian countries in electricity generation businesses.

Mukundan Srinivasan, managing director and CEO at SP Infra, said the company had decided a year ago to divest a part of its operating portfolio to redeploy capital for the development of new solar projects. “We continue to see large opportunities for the growth of the renewable sector in our country,” he said.

A December 2018 report by credit ratings agency ICRA said that SP Infra will use the proceeds from the transaction, amounting to about Rs 1,000 crore, towards meeting its equity commitments over the next eighteen months for under construction projects. 

Credit Suisse and Khaitan & Co were the financial and legal advisers, respectively, to SP Infra for this transaction. Standard Chartered Bank and Trilegal acted as the exclusive financial and legal advisers, respectively, to Actis.

Renewable energy deals

The Indian government has set a target to add 175 GW of renewable energy into the country’s grid by 2022. It plans to increase solar power generation to 100 GW and wind to 60 GW by 2022. The remaining 15 GW will come from biomass and hydropower.

To achieve this, the government will, beginning in June this year, launch transmission-line tenders worth $5 billion.

Analysts are sceptical whether the government can meet these ambitious targets, but this hasn’t prevented investors from striking several large ticket investments in the space. 

The overall value of deals in the sector jumped eight times to a tad above $4 billion in 2018 from $471 million in 2014.

Last month, EverSource Capital and the National Investment and Infrastructure Fund (NIIF) joined forces to invest in an India-focussed renewable energy platform floated by UK-based development finance institution CDC.

The trio will cumulatively invest $330 million (around Rs 2,340 crore) in Ayana Renewable Power. 

Other top deals in the segment include ReNew Power Ltd’s acquisition of rival Ostro Energy from PE firm Actis in 2018. It was one of the largest buyout deals in the renewables power sector. 

In October 2018, media reports stated that Hyderabad-based renewable energy major Greenko Group would acquire AT Capital-backed Orange Renewable Power Pvt. Ltd for an enterprise value of $850 million (Rs 6,300 crore then).

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