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Canada pension fund CDPQ buys more shares of Azure Power, becomes majority shareholder
Photo Credit: Reuters

Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ) has purchased more shares in renewable energy firm Azure Power Global Ltd, with the move resulting in a majority stakeholding.

As a result, CDPQ’s stake in the New York Stock Exchange-listed company has risen from 49.4% to 50.9%, according to a press release.

The investment amount is not known.

Azure’s stock is currently trading at $16, valuing the firm at $762 million (Rs 5,670 crore at current exchange rate). Going by the stock price, a 50.9% stake would value CDPQ’s stake in the company at a little over $380 million (Rs 2,827.5 crore at current exchange rate).

In November 2019, the pension fund said that it plans to invest an additional $75 million in the Indian solar power developer.

After this investment, CDPQ’s stake bumped up from 41.4% to 49.4%. Also, the fresh capital infusion took the fund’s total investment in Azure to around $320 million from $245 million.

The fund had first invested in Azure in September 2016. The initial investment of $75 million, which was CDPQ’s first India deal, was made just before Azure listed on the New York Stock Exchange. 

In 2018, the fund invested an additional $100 million.

In July 2019, Azure made top-level changes after its founder stepped down as the chief executive. The changes came at a time when shares of Azure—the first Indian renewable energy company to list on the New York Stock Exchange—were hammered.

Azure named Ranjit Gupta its new chief executive and Murali Subramanian president after founder Inderpreet Wadhwa said in May he would retire. The solar energy company didn’t specify any reason for the retirement of 47-year-old Wadhwa, who started Azure a decade ago and made it one of India's biggest renewable energy producers.

Interestingly, both Gupta and Subramanian come from Azure’s competitor Ostro Energy, which was bought by bigger rival ReNew Power Ltd in April 2018.

The International Finance Corporation (IFC), the World Bank’s private-sector investment arm, and venture capital firm Helion Venture Partners are the other big shareholders in Azure. German development finance institution DEG and France’s Proparco also own small stakes.

While DEG, Proparco, Helion and IFC invested in Azure at an early stage, CDPQ first backed the company only in 2016. 

Apart from equity investments, Azure has also raised debt financing. In 2018, for instance, it received $135 million in debt funding from IFC, Dutch development bank FMO, Proparco and Austrian development bank OeMB.

The company has, however, had a volatile ride ever since it listed on the New York Stock Exchange in October 2018 at $13.75 levels. By January last year its stock price had fallen to $8.5 levels, before bouncing back up. The counter is currently trading at $16, valuing the firm at $762 million. 

A VCCircle analysis has shown that Azure has shown consistent growth in revenue and that it turned profitable in 2018.

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