Private power player Tata Power Co Ltd has signed a share purchase agreement with BP Alternative Energy Holdings Ltd to buy the latter’s 51 per cent equity and preference shares in the joint venture Tata BP Solar India Ltd for an undisclosed sum, the company has said today.
Tata Power would require necessary approval from the Reserve Bank of India and Competition Commission of India to complete the transaction.
Under the agreement, the JV will continue to enjoy access to certain BP technologies until 2013. The joint venture and BP will also enter into a technology agreement to give effect to this understanding, the statement has added.
In order to facilitate a smooth transition in terms of branding and fulfilment of re-certification requirements for solar PV modules, both the parties have agreed to product and non-product-related re-branding and certification.
On the BSE, Tata Power scrip closed at Rs 90.25, up 1.92 per cent from the previous close.
Tata BP Solar India was incorporated as a joint venture between the Tatas and BP Solar India Holdings Ltd in 1989 for the purpose of manufacturing photovoltaic cell and modules. BP holds 51 per cent stake in the share capital of the joint venture.
The deal follows the recent announcement of strategic exit by BP from its global solar business as the company struggled to stay profitable. BP has been slowly scaling down its solar business after facing price competition from Chinese firms in the panel business.
Although solar energy is fast becoming a ‘sunrise’ sector in India and has attracted considerable interest from investors, as well as cross-border partnerships, the industry is seeing a consolidation globally.
Early this year, in one of the most high profile developments, Solyndra filed for bankruptcy protection while in Dec 2011, Germany’s Solon went bankrupt. Incidentally, in October this year, Overseas Private Investment Corporation (OPIC), the US government’s development finance institution that pools together private sector funds, lent $150 million or around Rs 750 crore for a project to expand the use of solar energy to power telecommunication towers in India.
In June, IFC invested $4 million in Sapphire Industrial Infrastructures Pvt Ltd, a subsidiary of Moser Baer Clean Energy Ltd. Sapphire is constructing a 5 MW solar plant at Sivaganga in Tamil Nadu. IFC has also put money in three other solar power-related firms in India in the past two years. Two of those companies are NDPL Solar and Azure Power. Moser Baer Photovoltaic Ltd is one of the Indian firms that has attracted a lot of private equity interest and has absorbed investments worth over $200 million till date.