Hindustan Powerprojects in talks to sell solar assets

Money may be used for expansion and also to provide a partial exit to Blackstone


India needs $200 billion in investments to reach its target of 100GW of solar energy and 60GW of wind energy by 2022. Photo: Reuters
India needs $200 billion in investments to reach its target of 100GW of solar energy and 60GW of wind energy by 2022. Photo: Reuters

Mumbai: Hindustan Powerprojects Pvt. Ltd has initiated discussions with investors to sell around 300 megawatts (MW) of solar assets, three people aware of the development said.

The money could be used for expansion and also to provide a partial exit to its private equity investor, Blackstone.

The sale could fetch the Blackstone-backed power asset developer almost $300 million (around Rs.2,000 crore), said one of the three, requesting anonymity as the talks are private.

The company is “talking to various financial and strategic investors. The portfolio of assets it is looking to sell has an enterprise value of almost $300 million, of which almost $100 million is equity and the rest, debt”, this person added.

Hindustan Powerprojects has been exploring options to raise funds to create more power assets and also to provide an exit to Blackstone, said the second person on condition of anonymity.

“While the company has been talking about an IPO (initial public offering), that is still some time away. At the same time, Blackstone, which invested about $300 million in Hindustan Powerprojects in August 2010 and holds more than 30% (in the company), has been contemplating an exit. So, it has been looking at these asset sales to raise funds,” he said, adding that the company has hired investment bank JPMorgan India Pvt. Ltd to advise on the asset sale.

Spokespersons of Hindustan Powerprojects, Blackstone and JPMorgan declined comment.

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The company, formerly known as Moser Baer Projects Pvt. Ltd, has 600MW of solar capacity. In April, it commissioned a 1,200MW thermal power plant at Anuppur in Madhya Pradesh.

It plans to reach 2 gigawatts (GW) in total solar capacity by 2017 and has a target of reaching 7GW of total capacity by 2020 from coal, solar and hydroelectric power sources. According to its website, it is in advanced stages of commissioning more than 5GW by 2017 of combined power assets at an estimated investment of $5.15 billion. Besides India, the company has power generation assets in Germany, Italy, the US, the UK and Japan.

In April, the company’s chairman, Ratul Puri, said that depending on the incremental capital requirement, Hindustan Powerprojects could look at an IPO some time in 2017.

This year has seen significant merger and acquisition (M&A) activity in the Indian renewable energy space.

In June, Tata Power Co. Ltd acquired a large chunk of renewable assets from Welspun Enterprise Ltd at an enterprise value of $1.4 billion.

According to a report in The Economic Times, Greenko Energy Holdings is set to buy SunEdison’s Indian assets, and will pay a small premium of less than $100 million in an all-cash deal. “As compared to about a year ago, the market today is witnessing a lot of churn of assets. There is M&A activity on both the wind and solar power side,” said Sanjay Sethi, managing director and chief executive at infrastructure advisory firm Nestor Consulting India.

India has set itself the ambitious target of increasing its clean energy capacity more than fivefold to 175GW by 2022. Of this, around 100GW is to come from solar power. In the climate change talks held in Paris last December, Prime Minister Narendra Modi said that by 2030, 40% of the country’s installed power capacity would be based on non-fossil fuel.

India needs $200 billion in investments to reach its goal of 100GW solar energy and 60GW wind energy by 2022. Overseas investors and global renewable energy firms are making a beeline for the country and several Indian conglomerates are looking at the sector more seriously.

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