New York-listed AES Corp has agreed to sell its 49% stake in Odisha Power Generation Corp to Adani Power Ltd, ending its 22-year-long association with the state utility.
The US-based energy company will sell the stake in Odisha Power for $135 million (Rs 1,020 crore) in cash, Adani said in a stock-exchange filing.
The Odisha government will retain its 51% stake in the utility that operates a 1,740 megawatt coal-fired power plant in the state’s Jharsuguda district. The deal is subject to customary regulatory approvals.
The deal marks the end of the road for AES in India’s thermal power sector, where only a handful of foreign companies have entered in the past three decades despite the government’s efforts to attract overseas investment.
After AES’s exit, CLP India Pvt. Ltd and Sembcorp Energy India Ltd are now the only significant foreign players in India’s thermal power sector. CLP India is 60% owned by Hong Kong-listed CLP Group and 40% by Canadian pension fund CDPQ while Sembcorp India is fully owned by Singapore’s Sembcorp Industries.
However, India has received a lot of foreign investment in the renewable energy sector, mainly from pension funds, sovereign wealth funds and private equity investors based out of the US, Canada, Europe and the Middle East.
In fact, CLP and Sembcorp are also ramping up their renewable energy portfolio in India. AES itself is focussing on renewable energy as Western energy firms look to cut carbon emissions.
AES said in a separate statement that the stake sale was part of its global strategy to reduce the share of coal in its portfolio. The company said coal will now account for 35% of its generation, down from 45% previously.
The American company had previously announced a goal to reduce its generation from coal to below 30% by the end of this year and to less than 10% by the end of 2030.
AES had entered India in 1992 and had set up some wind power projects, too. It sold its wind energy projects to Tata Power Renewable Energy Ltd in 2013. Last year, AES again joined hands with Tata Power as well as Japan’s Mitsubishi Corp for a 10-MW grid-scale battery-based energy storage system in Delhi.
Meanwhile, Adani Power, part of billionaire Gautam Adani's diversified conglomerate, said the acquisition marks its foray into Odisha and shows the group's commitment to develop and operate infrastructure facilities in the state.
Adani Group, via its various units, has made a number of acquisitions in the energy, ports, logistics and other sectors to expand rapidly over the past few years.
In January this year, for instance, Adani Ports and Special Economic Zone Ltd agreed to acquire a 75% stake in the Andhra Pradesh-based Krishnapatnam Port Company Ltd for an enterprise value of around $1.9 billion.
Also in January, Adani Capital Pvt. Ltd snapped up Essel Finance’s micro, small and medium enterprise loan business.
The group has also roped in a couple of high-profile foreign investors in recent months. In October last year, French energy giant Total SA agreed to buy a 37.4% stake in Adani Gas Ltd for as much as $868.5 million. Two months later, Qatar Investment Authority sealed a deal for a 25.1% stake in Adani’s Mumbai power distribution business for about $450 million.