London-listed clean energy producer Greenko Group PLC has raised $50 million from an arm of the NYSE-listed conglomerate General Electric Company to expand its wind energy operations in India. Greenko, which develops, owns and operates clean energy projects, has raised the funding for its newly created wind holding company Greenko Wind Project Pvt Ltd.
Greenko, which is backed by PE firms like TPG Growth and Aloe Environment Fund, has recently raised $80 million through a primary and secondary offering for its wind strategy. “Greenko Wind Project expects to raise further equity and debt in due course to support this area of business,” the company stated. Greenko is also expected to commit $65 million to the new unit.
The funding from GE Energy Financial Services will help Greenko Wind Project develop the initial 500 MW out of its planned development of 1 GW of wind energy projects across India. The investment will be done in two tranches of $25 million for equity shares and $25 million for convertible preference shares in Greenko Wind Project. The deal is subject to completion of reorganisation of Greenko’s wind energy division and the commissioning of Greenko’s Ratnagiri wind energy project.
“GE will also be entitled to participate in the event of any IPO of GWPP or any intermediate holding company. Greenko has negotiated the right to acquire half of GE’s interest in GWPP prior to any IPO of GWPP. As an alternative, within a year from the expected date of any GWPP IPO, GE can sell its entire interest in GWPP to Greenko. In either case, in the absence of any other applicable benchmark, the purchase price will be calculated by reference to a mutually agreed internal rate of return and be payable in cash,” Greenko stated in a filing to the exchange.
Interestingly, General Electric is one of the world’s largest wind turbine suppliers and has signed a memorandum of understanding (MoU) with Greenko to supply, install, erect and maintain XLE 1.6 MW turbines. Greenko plans to develop more than 1 GW of wind assets in Maharashtra, Andhra Pradesh, Karnataka and Rajasthan. It has secured concessions to build a 300 MW wind farm from the Karnataka government, which will be built in two phases. The first project, the 65 MW Ratnagiri wind farm in Maharashtra, is planned for completion in December this year and will use GE’s 1.6 MW turbines.
“Wind power is an increasingly important part of the Indian energy market, and through our partnership with GE, a global energy leader, we are well positioned to play an important role in helping to meet the country’s energy needs with clean power using advanced technology,” said Anil Kumar Chalamalasetty, CEO and managing director of Greenko.
Greenko estimates that with an average growth rate of 30 per cent, wind energy is the fastest growing clean energy source in India. The company estimates that less than 25 per cent of the country’s wind energy potential – estimated at 45,000 MW – has been harnessed to date. The Indian government has set a renewable energy target of 15 per cent by 2020 and provided what Greenko believes is a strong and clear policy framework to support the continued expansion of renewable energy sources.
“The group will also benefit from GE Energy Financial Services’ renewable energy investment expertise, demonstrated by building a $6 billion portfolio of renewable energy investments worldwide. The investment expands GE’s presence in India, which dates back to 1902 when they installed India’s first hydropower plant,” the statement added.
Greenko operates 182.6 MW in current capacity across wind, hydroelectric, natural gas and biomass assets, and aims to reach 1 GW of operational capacity by 2015. Greenko, which was initially focused on hydro and biomass-fired plants, expanded into wind energy last year. Its portfolio is split between 104.3 MW of hydro, 41.5 MW of biomass and 36.8 MW of gas/liquid fuel. Greenko’s portfolio, which includes projects in the development pipeline, currently stands at 1.63 GW.
Greenko reported 130 per cent increase in turnover in 2011 to $59.4 million (€44.4 million) with profit before tax up 188 per cent at $18.72 million (€14 million) for 2011.
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