Mumbai: Malaysia’s state-owned oil and gas company, Petroliam Nasional Berhad, or Petronas, is in talks with New York-based I Squared Capital to buy a majority stake in Amplus Energy Solutions Pvt. Ltd, one of India’s largest rooftop solar power producers, in a potential deal worth about ₹ 2,700 crore, said two people aware of the development.
Global oil giants are looking to diversify and invest in India’s emerging green economy as the conventional hydrocarbon space undergoes technological disruptions.
Norway’s Statoil ASA, France’s Total SA and Royal Dutch Shell Plc have also shown interest in investing in Amplus that has set up 350 megawatts of capacity across India. Russia’s OAO Rosneft, the world’s largest publicly-traded oil firm, has also been exploring opportunities in India’s solar energy sector.
“The talks are on for Petronas to acquire a majority stake in Amplus," said the first person, requesting anonymity. Another person, who also did not want to be named, confirmed the development.
In the renewable energy business, the biggest expense is the cost of capital. And, the financial heft of global oil majors may help India’s clean energy sector.
Distributed renewable energy generation is attracting strong investor interest as the market has few developers with large portfolios. Warburg Pincus LLC, the New York-based private equity firm, in 2017 announced a $100 million investment in rooftop solar developer CleanMax Solar. Of India’s plan to add 100 gigawatts (GW) of solar power capacity by 2022, it has targeted 40GW from rooftop projects.
Founded in 2010, Amplus counts India Yamaha Motor Pvt. Ltd, Jubilant FoodWorks Ltd, Walmart India Pvt. Ltd, Hilton Hotels Corp. and Gurgaon-based Vatika Group among its clients, which are trying to cut their energy costs by harnessing the sun.
“I regret to say that Amplus Energy Solutions does not comment on market speculations," said an external spokesperson for Amplus in an emailed response to queries.
I Squared Capital, an infrastructure-focused private equity firm, invested $150 million in the company in April 2015. Amplus has grown its portfolio through both greenfield projects and acquisitions. It acquired US solar power developer SunEdison’s rooftop solar power assets in India. While I Squared Capital holds over a 90% stake in Amplus, the balance is held by the management team led by Amplus founder, managing director and chief executive officer Sanjeev Aggarwal.
Queries emailed to Gautam Bhandari, founder of I Squared Capital, managing director Andreas Moon and India head Harsh Agrawal on 11 January remained unanswered.
Petronas did not respond to queries.
India’s renewable energy space has been growing. The government says the country is ranked fifth globally in terms of installed renewable energy capacity. As of 31 October, India had an installed renewable energy capacity of 73.35GW. Also, 101.83 billion units of electricity were generated in 2017-18 from renewable energy sources.
While the National Democratic Alliance (NDA) has plans to bid 60GW capacity of solar energy and 20GW capacity of wind energy by March 2020, concerns that have marred the conventional power generation sector have now started emerging in the green energy space, with questions being raised about asset quality.
A case in point is Moody’s Investors Service downgrading the rating outlook of Indian Renewable Energy Development Agency Ltd (Ireda) to negative from stable, on Tuesday. “The rating actions take into account the deterioration in Ireda’s financial performance, due to an increase in problem assets, as well as a significant decline in profitability, driven by certain changes in accounting norms," Moody’s said in a statement.
Moody’s downgrade is significant as Ireda is the nodal agency for the government’s ambitious clean energy initiatives such as the rooftop solar power programme and generation-based incentive scheme for wind and solar power projects, among others.
Founded in 2012 by former Morgan Stanley executives, I Squared Capital focuses on energy, utilities and transport in North America, Europe and high-growth economies.
In India, I Squared Capital has so far set up two platforms—Cube Highways, a roads and highways platform; and Amplus Energy Solutions, which builds rooftop solar projects. Mint had reported on 4 December about I Squared Capital creating a new renewable assets platform that will acquire and develop utility-scale projects.