UK's infrastructure-focused private equity firm Actis has signed a deal to acquire Finnish state-controlled firm Fortum Oyj’s two solar power plants in India for around 280 million euros (approximately Rs 2,480 crore or $335 million).
“Fortum has signed an agreement to divest the 250 megawatt Pavagada II and the 250 MW Rajasthan solar power plants in India to Actis, a global infrastructure investment firm. The total consideration from the divestment on a debt and cash-free basis, including the effect of deconsolidating the net debt, is expected to be approximately 280 million euros, most of which will be recorded during 2021," said a company statement.
While Fortum has divested its entire stake in the Pavagada II project, it still retains 51% stake in the Jaisalmer project in Rajasthan as per regulatory requirements.
The deal with an equity value of around 100 million euros also involves Actis contributing equity to develop projects in India and overseas along with Fortum.
"This is an important step for Actis as we further strengthen our presence in India building on our achievements to date," said Mikael Karlsson, partner and head of energy infrastructure at Actis.
The sale is part of Fortum’s build-operate-transfer business model strategy to take risks early on and eventually monetise a project to raise capital for new ventures.
“The divestment will be completed, and the capital gain recorded in three tranches; during the second half of 2021 and the first half of 2022," the statement further said.
Earlier this month, Actis promoted its energy infrastructure director Abhishek Bansal to the post of a partner.
The London-based PE firm entered India in 2012. It started making renewable energy investments in India just before Prime Minister Narendra Modi-led government in early 2015 decided to install 175 gigawatt of renewable energy capacity, including 100 GW of solar power, by 2022.
Since then, the British investor has constructed 680 MW of solar power plants in India. In October last year, it had planned to invest as much as $1 billion in India’s renewable energy sector over the next five years.
In June 2018, Fortum had agreed to sell a 54% stake in 185 MW solar projects in India to UK Climate Investments (40%) and Elite Alfred Berg (14%).
Actis entered India’s renewable energy sector in late 2014 with an initial commitment of $230 million to Ostro Energy Pvt Ltd. It subsequently increased the commitment to $300 million, before selling Ostro to ReNew Power Pvt Ltd in 2018.
Asia remains a key market for Actis as it grows its infrastructure investments in the region.