Multinational telecommunications firm Bharti Airtel Ltd has picked up a small stake in a subsidiary of renewable power firm Avaada Energy Pvt Ltd.
In a stock exchange filing, Airtel said it had picked up a 5.2% equity stake in Avaada MHBuldhana Pvt Ltd, which is a special purpose vehicle formed for owning and operating a captive solar power plant.
Bharti Airtel will invest Rs 4.55 crore (about $613,993) in this subsidiary in an all-cash deal. It expects the deal to close by the end of March next year.
The investment will help it comply with regulatory requirements for captive power plants. Shares of Bharti Airtel Ltd were trading at 1.69% down at Rs 475.35 apiece at the time of writing this report.
Avaada MHBuldhana was incorporated in November last year, and the plant being operated by the company will be based in Maharashtra. This plant is also expected to commence operations by the end of March 2021.
It is part of Avaada Energy, which was set up by serial entrepreneur Vineet Mittal. He had previously co-founded Welspun Renewable Energy Pvt Ltd. Mittal started Avaada after Tata Power Co. acquired Welspun for $1.4 billion in 2016.
Since its inception, Avaada Energy has raised capital from several development finance institutions, including The Netherlands’ FMO and Germany’s DEG. In June this year, VCCircle reported that the firm was raising funding in a bridge round from a European investor to help expand its generating capacity.
Airtel reported consolidated net sales of Rs 87,539 crore for the 2019-20 financial year, with net loss of Rs 30,664.2 crore for the same period.