BackHindustan Powerprojects likely to list itself before subsidiaries
The power producer plans to first take the holding firm public instead of listing its solar unit, says a company spokesman
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Mumbai: Hindustan Powerprojects Pvt. Ltd, backed by private equity firm Blackstone Group LP, is reworking its fund raising plans. The power producer plans to first take the holding firm public instead of listing its solar unit, a company spokesman said.
Hindustan Powerprojects, formerly Moser Baer Projects Pvt. Ltd, had in 2014 said it would list its solar unit Hindustan Cleanenergy on the Indian exchanges. The holding firm Hindustan Powerprojects will get listed first followed by the solar and the thermal units, the spokesman said in an emailed response.
“Though not definite but the IPO plans could be in second or third quarter of 2016-17," he said. He declined to comment on how much the company plans to raise.
Blackstone, which invested about $300 million in Hindustan Powerprojects in August 2010 and holds more than 30%, may consider selling its stake in 2017, when it completes seven years of its investment. Chairman Ratul Puri is the majority shareholder in the company.
India’s renewable energy market would need $200 billion in investments to reach its target of 100 gigawatts (GW) of solar energy and 60 GW of wind energy by 2022. Overseas investors and global renewable energy firms are making a beeline for India; several Indian conglomerates are looking at the sector more seriously.
Earlier this month, Delhi-based solar energy firm Azure Power Global Ltd filed for an IPO in the US to raise $100 million (about ₹ 660 crore), the company’s filings with the New York Stock Exchange showed.
Another green energy producer ReNew Power Ventures Pvt. Ltd, backed by Goldman Sachs Group Inc., has put on hold its IPO plan after it recently raised $265 million in fresh equity from investors, including sovereign wealth fund Abu Dhabi Investment Authority, Mint reported on 28 December. (https://bit.ly/1MGI4ir)
Orient Green Power is the only renewable energy firm listed on the Indian bourses; Greenko Group and Mytrah Energy are listed on the London Stock Exchange. Indian conglomerates such as Reliance Group, Welspun Enterprises and Tata Power have non-listed renewable energy arms.
Delhi-based Hindustan Powerprojects, which was formed in 2008, was among the first companies to set up solar projects in India. It operates 500 MW of solar capacity and 1,200 MW of thermal capacity. It plans to reach 2 GW in total solar capacity by 2017 and has a target of reaching 7 GW of total capacity by 2020 from coal, solar and hydel power sources.
The firm is in advanced stage of commissioning over 5GW by 2017 of combined power assets at an estimated investment of $5.15 billion, according to the company’s website. Besides India, the company has power generation assets in Germany, Italy, the US, the UK and Japan.
Hindustan Powerprojects’ bankers have advised it to wait for more projects to come on stream before looking at listing the solar unit. Companies with a mixed energy portfolio comprising renewable, thermal and hydro power are likely to generate optimum leverage at the market, the company spokesman said.
Solar tariffs have fallen about 70% in the last five years, from ₹ 14.90 per kWh (kilowatt-hour) in 2010 to a new low of ₹ 4.63 per kWh in 2015, rivaling prices of conventional power sources.
Power Producers have underperformed the markets over the last two years and has not found favour among public market investors because of factors ranging from a halt in the investment cycle leading to stagnation in capacities, fuel supply issues and slower growth in power demand, said Ashish Agarwal, director (infrastructure) at Equirus Capital Pvt. Ltd, an investment bank.
“It is surprising to note that apart from Orient Green Power (listed on the Indian exchanges over five years ago), Indian exchanges have not seen another renewables company get listed," Agarwal said. “Valuation gaps could be one key reason, caused due to differences in discounting rates versus expectations."
The BSE Power Index, which includes power generators such as Tata Power, JSW Energy and Adani Power, fell 7.12% in the past 12 months, underperforming the exchange’s benchmark Sensex, which shed 5.6%.
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