An infrastructure fund managed by financial services conglomerate Edelweiss Group has agreed to acquire a 74% stake in French gas and power utility Engie’s solar assets in India.
Engie said in a statement that Edelweiss Infrastructure Yield Plus and the fund’s portfolio company Sekura Energy Ltd will acquire the stake in 12 solar assets with a total capacity of 813 megawatt-peak.
The French company didn’t disclose the exact deal value but said the transaction will help it reduce its net debt by more than €400 million ($443.6 million).
The deal is part of Engie’s strategy to reorient its energy business. The multinational company had said last year that it would pull out of about 20 countries and look for new markets in developing countries where access to energy was a challenge. In such countries, like India, Engie planned to invest in offgrid power, microgrids and home solar.
Indeed, Engie had last year picked up a significant minority stake in a Jaipur-based last-mile distribution firm that offers solar energy solutions. Previously, it had sold its 89% stake in thermal power producer Meenakshi Energy Ltd to India Power Corp in 2016.
In fact, Engie has been selling assets in other countries as well. Earlier this week, British electricity supplier Octopus Energy snapped up Engie’s household energy supply business in the UK.
Engie’s total renewable capacity in India exceeds 1,500 megawatt. This includes, apart from the solar assets, two wind farms in Tamil Nadu and Gujarat.
The company said that it aims to grow the solar platform along with Edelweiss and that it will remain in charge of the development, construction and operation of present and future solar plants.
“This transaction allows us to accelerate the implementation of our strategic model in renewables, and to free up capital to keep up investing in the very dynamic Indian solar market,” Engie COO Paulo Almirante said.
The deal comes even as states like Andhra Pradesh, Telangana, Uttar Pradesh and Odisha have either moved to or have been threatening to renegotiate renewable energy contracts.
Edelweiss’s energy play
The EIYP fund, which backs Sekura Energy, is managed by Edelweiss Alternative Asset Advisors Ltd. The alternative investment fund invests in operational assets in the power transmission, renewable energy and roads sectors.
Edelweiss had launched the fund in late 2017 to raise as much as $1 billion. It hit the fund’s first close in 2018. Late last year, media reports said Edelweiss had started the second phase of fundraising for the vehicle and was looking to close it at $750 million this year.
The transaction with Engie expands Sekura’s energy business. Previously, Sekura had agreed to buy a stake in four power transmission assets from Essel Infraprojects Ltd in October 2018.
In fact, Sekura has been on the prowl for infrastructure assets for the past few years. Last year, Sekura Energy was said to be in talks to acquire the power transmission assets of Kalpataru Power Transmission Ltd.
Sekura Roads, another platform backed by EIYP, was planning to acquire two annuity road projects last year from Hyderabad-based Navayuga Group for $150 million, according to a Mint report.