SunEdison to acquire Morgan Stanley Infrastructure Partners-backed Continuum Wind Energy

World's largest renewable energy developer SunEdison Inc has signed an agreement with Singapore-based Continuum Wind Energy Ltd to acquire the company along with its India assets, for an undisclosed amount.

The deal, which is subject to regulatory approvals, is expected to close in the third quarter of 2015, the company said in a press release.

Although the value stands undisclosed, given the operating and under-construction assets of the firm, this is the biggest acquisition deal in the renewable energy space in the country to date.

SunEdison said it intends to place the power plants acquired from Continuum on the operational call rights list for TerraForm Global. Operation and maintenance of the wind power plants will be performed by SunEdison Services.

TerraForm is an indirect subsidiary of SunEdison, formed to own and operate contracted clean power generation assets in emerging markets. SunEdison recently raised $335 million through TerraForm and had previously announced plans to take the firm public.

"With the acquisition of Continuum, a leading wind energy company in India, we have added significant assets and a skilled wind development team to drive further growth in our renewable energy development platform. This acquisition reinforces SunEdison's commitment to India and will drive immediate shareholder value," said Ahmad Chatila, president and CEO, SunEdison.

Started in 2009, Continuum Wind Energy owns and operates 242 megawatts (MW) of wind power plants in Maharashtra and Gujarat and has 170 MW of wind power project under construction in Madhya Pradesh. The company has more than 1,000 MW of wind power plants in development across six states in India.

It was founded by Arvind Bansal, an investment banker; Vikash Saraf, ex-Essar Group Director; Sukant Gupta, a former Wipro executive; Ashish Swarup, a former executive of Asian Pulp & Paper and former banker Gautam Chopra.

Continuum started operations in India through its acquisition of Surajbari Wind Farm Development Pvt Ltd, operating in Kutch. Surajbari was acquired for Rs 72 crore from Vestas, a Denmark-based wind power company.

It is majority owned by Morgan Stanley Infrastructure Partners, a $4 billion global infrastructure investment fund under Morgan Stanley.

In 2012, Morgan Stanley had committed investment of Rs 1,200 crore ($212 million) in the company through compulsorily convertible preference shares for 51 per cent stake.

It gets a quick exit from its Indian portfolio firm even as infrastructure is said to be long gestation investment bet.

The fund had earlier also backed another power firm Asian Genco a company that hit headlines over a management-investor tiff. The infrastructure fund's other investment is in road developer Indus Concessions India Pvt Ltd (formerly Isolux Corsan Concessions India Pvt. Ltd.)

The firm had roped in SG Shyam Sundar and Raja Parthasarathy, former senior partners at IDFC Alternatives, as managing directors to co-head its India infrastructure fund advisory platform, last year.

Although the group is yet to seal any new investment deal since 2012, this counts as a significant exit activity for the direct private investment unit of Morgan Stanley.

There have been a few other large PE investments in the renewable energy sector. Last year, the private equity arm of Goldman Sachs, regional development financial institution Asian Development Bank (ADB) and South Asian Clean Energy Fund, a PE fund managed by Global Environment Fund, together invested $140 million (approximately Rs 835 crore) in ReNew Power Ventures. This took the total private equity funding in the company to $390 million (approximately Rs 2,158 crore).

Early this year, Actis created Ostro Energy and committed an initial amount of $230 million to build a portfolio of 300 MW wind power assets in two years.

Then there have been a slew of small sized wind power related M&As over the last couple of years: realtor DLF sold its wind power business to separate buyers, commercial vehicles maker Ashok Leyland sold stake in its unit, Techno Electric and Engineering Company sold its wind power asset in Tamil Nadu to an unnamed buyer and KKR-backed Enzen Global acquired Luminous Renewable Energy. Several of these were sealed earlier this year.

With India being a power starved country, the global push for clean energy has attracted both strategic and financial investors to look at the renewable energy space in the country.

Indeed, SunEdison itself has been actively pursuing inorganic growth opportunities in India. Last month, it sealed a string of global deals spread across six emerging countries - including two in India - which gave it additional 757 MW of operating wind, solar and hydropower projects.

In India, it inked an agreement to acquire 102 MW of operating wind power plants in Karnataka and Rajasthan from Spain-based Fersa Energías Renovables, SA for $33 million and also agreed to acquire the 51 per cent equity interest from its partner, an affiliate of Chint Solar (Zhejiang) Co. Ltd, in the 23.1 MW solar project NSM 24 located in Rajasthan.

Founded in 1959, SunEdison develops, finances, installs, owns and operates renewable power plants.

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