CPPIB seals first leg of $370 mn deal with ReNew Power
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Canada Pension Plan Investment Board (CPPIB) has acquired a 6.3% stake in ReNew Power Ventures Pvt. Ltd from the Asian Development Bank for $144 million (Rs 920 crore), the investment firm said on Monday.

The deal values the renewable energy company around $2.28 billion (Rs 14,595 crore).

This is the first stage of CPPIB’s investment in the company. VCCircle had, in November, reported that CPPIB was close to picking up a 15-17% stake in ReNew Power through a mix of primary and secondary transactions. A person close to the development had said at the time that the pension fund would make a primary investment of about $200-220 million and that the remaining would be a stake purchase from the ADB.

“This transaction aligns well with our overall power and renewables strategy, further diversifying the CPP Fund,” Scott Lawrence, managing director and head of fundamental equities at CPPIB, said in a statement.

He said that India’s overall power industry continues to grow and the fund sees solar and wind as attractive clean energy sources to meet the country’s growing demand for electricity.

CPPIB’s investment in the company will strengthen its resolve to transform the country’s energy portfolio, said Sumant Sinha, chairman and chief executive officer of ReNew Power.

ADB had, in 2014, invested $50 million (Rs 300 crore then) to buy a 10.69% stake in ReNew Power. Last year, ADB made a debt investment in ReNew Power.

ReNew Power could not be immediately reached for comments.

The renewable energy sector has seen several deals in India since 2015 when the government set an ambitious target of 175 gigawatts generation capacity for the sector by 2022. India’s renewable energy capacity stood at 62.05 GW as of 30 November 2017.

ReNew Power

Founded in 2011 by former investment banker and Suzlon Energy COO Sumant Sinha, ReNew Power has over 3,500 megawatts of commissioned and under-construction clean energy capacity across 16 states in India, according to its website.

It counts Goldman Sachs, Abu Dhabi Investment Authority, ADB and Global Environment Fund as its investors, besides Japan’s JERA Co, which had pumped in around $200 million in February last year for a 10% stake at a valuation of $2 billion.

Goldman Sachs was an early backer of the company in 2011, and had subsequently taken part in funding rounds in 2013 and 2014. It is the lead investor in ReNew Power with $370 million in investments while Global Environment Fund has invested $35 million in the renewable energy producer.

ReNew Power is planning to go public by mid-2018 to allow Goldman Sachs to trim its stake in the company.

CPPIB’s India play

As on 30 September 2017, CPPIB investments in India stood around $4.8 billion.

In 2017, it has committed over $1.8 billion in fresh investments in India-related companies including separate joint ventures with industrial realty investment firm Indospace and real estate developer The Phoenix Mills, besides stakes in Kotak Mahindra Bank, SBI Life Insurance and Bharti Infratel and a large deal for GlobalLogic.

Previously, CPPIB had invested in firms including Kotak Mahindra Bank and L&T Infrastructure Development Projects, besides forming joint investment platforms with Piramal Enterprises and Shapoorji Pallonji Group.

In 2015, the Canadian investor joined a consortium to invest in multiplex operator PVR and later reinvested in the firm. In 2016, it increased its stake in Kotak Mahindra Bank.

Besides its direct investments in India, it also invests in third-party PE funds as an LP. Its Indian LP portfolio includes investments in Multiples Alternate Asset Management and True North. Both these firms raised new sector-agnostic PE funds for India in the past 18 months.

Recent deals in sector

Earlier this month, VCCircle reported that solar power producer Kiran Energy Solar Power Pvt. Ltd raised a fresh round of equity funding in a round led by global multi-stage investment firm Bessemer Venture Partners.

In November 2017, ReNew Power had agreed to acquire three fully operational wind power assets of KC Thapar Group having a total capacity of 103 MW.

In August 2017 , Singapore-based Sembcorp Industries Ltd had agreed to take full control of Sembcorp Green Infra Ltd by acquiring the stake of IDFC Private Equity Fund III for Rs 1,410.2 crore ($220 million).

In July 2017, IDFC Alternatives, through its green energy platform Vector Green Energy Ltd, had agreed to acquire 190 MW of solar power assets across seven projects in India from US-based First Solar Group and its local affiliates.

The same month also saw private equity giant Warburg Pincus investing $100 million in Mumbai-based rooftop solar projects developer CleanMax Enviro Energy Solutions Pvt. Ltd.

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