Japanese financial services group Orix Corp said on Friday that it will invest $980 million (Rs 7,207 crore) in Hyderabad-based Greenko Energy Holdings, in lieu of more than 20% stake in the wind and solar power generator.
Although Orix did not specify the exact shareholding it will acquire, a stake in excess of 20% will make it the second-largest shareholder after Singaporean sovereign wealth fund GIC Pte Ltd, which currently owns a majority 65% stake in Greenko.
Assuming that Orix’s stake will be closer to 20%, its latest investment would value the Mauritius-registered entity at over $4.9 billion (Rs 36,037 crore).
Other major shareholders in Greenko include the founders’ group led by Anil Kumar Chalamalasetty and Abu Dhabi Investment Authority, which owns 16.5% shares. Following the latest transaction, the shareholder mix is likely to change.
“In addition to acquiring Greenko’s issued shares from the founders’ group, Orix will integrate its entire wind power generation business in India, into Greenko in exchange for the power firm’s new shares,” Orix said in its release.
Orix, however, said that the exact and ongoing shareholding and investment amount may change as a result of transaction adjustments, exchange rates and future capital infusions.
Founded in 2004, Greenko recorded a topline of $661 million, and had assets worth $6.4 billion as of the end of March 2020.
In addition to an existing total capacity of about 4.4 gigawatt (GW) operating renewable portfolio in India—such as solar, wind, and hydro, Greenko recently announced a 1.2 GW hydro asset acquisition and has additional capacity under construction and in development of over 8 GW.
In 2016, Orix entered India’s wind power business (with a total capacity of 873 MW) through a joint investment. The assets were fully acquired by Orix in 2019. Furthermore, in 2017, Orix acquired 21.5% of shares in Ormat Technologies, Inc., a vertically integrated geothermal power company listed in the United States.
Tokyo-based Orix said in a release that it aims to close the transaction by the end of the year after completing due diligence and all other requisite legal processes.
In August last year, VCCircle had noted that Greenko had become perhaps the most-funded green energy company in India, outpacing the likes of Sumant Sinha-led and Goldman Sachs-backed ReNew Power Ltd.
Earlier that month, Greenko had raised $1.3 billion via bond sales. This was on top of an equal amount of equity capital it had mobilised over the preceding one year.
In so far as M&A deals go, Greenko has acquired assets from several peers including Suzlon, SunEdison and Lanco Hydro Power, VCCircle had noted.
In October 2018 alone, it struck two of its biggest acquisitions, buying Orange Renewable Holdings Pvt. Ltd from Singapore’s AT Capital Group and Skerion from beleaguered wind power company Suzlon Energy Ltd.
Two years before that, it acquired the India renewable energy business of US-based SunEdison Inc., adding 1.5 GW to its portfolio.
The Orix investment in Greenko is the latest in a series of deals in the Indian renewables sector, with foreign investors looking at good long-term bets at reasonable valuations.
Moreover, as Orix pointed out in its release, the renewable energy market in India has reached grid parity “owing to lower construction costs and favourable climate conditions, yielding cost advantages even when compared to thermal power".
India’s government has set a renewable energy target of 175 GW by 2022 “against an expected renewable energy level of 113 GW in 2020".
Installed renewable capacity in 2030 may reach 389 GW based on Bloomberg NEF’s forecast.
At least four other major renewable energy deals of more than Rs 4,800 crore have been announced in India in 2020, even as the economy has remained under complete or partial lockdown for the last six months owing to the coronavirus pandemic. The investors include KKR, Actis and Petrobras, to name a few.
Earlier in August, Ayana Renewable Power Ltd, backed by UK-based development financial institution CDC Group Plc, said it had acquired two solar power plants of 40 MW capacity in Karnataka from First Solar Power India Pvt Ltd.
Although Ayana didn’t divulge the deal value, its chief executive officer and managing director Shivanand Nimbargi told VCCircle that the enterprise value of the acquired assets was around Rs 210 crore.
Other investors that have bought renewable energy assets this year include Canadian alternative investment firm Brookfield Asset Management Inc., US-based private equity firm KKR and Indian financial services conglomerate Edelweiss Group.
Brookfield in June inked a deal acquire Emami Power Ltd, a solar power-focussed company owned by promoters of the Emami Group. In April, KKR snapped up five solar energy assets from Shapoorji Pallonji Infrastructure Capital for $204 million (Rs 1,554 crore).
And in January, an infrastructure fund managed by Edelweiss agreed to purchase a 74% stake in French utility Engie’s solar assets in India.
