CLP India eyes Essel Infraprojects’s power transmission business
New Delhi: CLP India Pvt. Ltd, one of the largest foreign investors in the Indian power sector, is interested in acquiring Essel Infraprojects Ltd’s power transmission business at a potential valuation of around $1 billion.
This makes it the second company—apart from Greenko Group, backed by Singapore’s sovereign wealth fund GIC Holdings Pte and the Abu Dhabi Investment Authority—to evince interest in acquiring these assets.
Mint reported on 15 January about Hyderabad-based Greenko’s interest in Essel Infraprojects’ transmission business amid low green energy tariffs in India that will likely squeeze project developers’ profitability.
“There are at least two firms who are eyeing Essel Infraprojects’ transmission business. They include CLP and Greenko Group,” said a person aware of the development requesting anonymity.
Essel Infraprojects has five transmission projects in its portfolio. Essel Group has presence across green energy, transportation, electricity transmission and distribution, and urban infrastructure.
Experts say that transmission projects, on their part, are considered to be a safer bet, given the annuity nature of the business and risks such as land acquisition, right of way and forest clearance are restricted to the construction stage.
“CLP has been one of the early foreign entrants into the Indian power sector, and has in recent times, moved from the conventional energy space into building a large renewable generation portfolio, which is in line with their objective to reduce their carbon exposure. CLP is also evaluating listing in the Indian markets, and acquiring a stable portfolio with guaranteed annuity flows like transmission would be in line with this objective,” said Chandan Mishra, director, power and utilities at PwC India.
With 1,000 megawatts (MW), CLP India has one of the largest wind power portfolios in the country. In addition, CLP India has an installed capacity of 2,000MW from coal, gas and solar projects.
An external spokesperson for Essel Group declined to comment. A CLP spokesperson also declined to comment.
Mint also reported on 19 January about Canada’s second largest pension fund Caisse de dépôt et placement du Québec looking to acquire a stake in the Indian unit of Hong Kong Stock Exchange-listed CLP Holdings Ltd.
Such an investment, if it happens, will help CLP access a large corpus that can be deployed for a longer period.
“Essel’s current portfolio of assets is attractive from the perspective of their tariff streams and could be an attractive proposition for new players entering through the acquisition route though valuations may be a concern,” added PwC’s Mishra.
CLP Holdings, founded in 1901 as China Light and Power Co. Ltd in Hong Kong, is among the two significant overseas entrants in India’s power generation sector along with US-based AES Corp. While it had articulated its intent in 2012 about withdrawing the India operations, it later changed its plans.
CLP is one of the largest investor-owned power businesses in the Asia Pacific and is present across Hong Kong, China, India, South-East Asia, Taiwan and Australia across fuel sources such as coal, gas, nuclear and renewable.
Essel Infraprojects also plans to sell its solar business with Greenko Group and Hero Future Energies Pvt. Ltd separately looking to acquire it, Mint reported on 5 February.
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