CLP India Pvt. Ltd, one of the largest foreign investors in India’s power sector, on Monday said it has bought a 49% stake in SE Solar, a unit of wind turbine maker Suzlon Energy Ltd, for 73.5 crore. The deal marks CLP India’s entry into the fast-growing solar energy sector.

The special purpose vehicle (SPV) of Suzlon is building a 100 megawatts (MW) solar energy plant at Veltoor in Telangana.

Mint reported on 30 May that CLP India is talking to Suzlon Energy for buying an initial stake of up to 49% in a 100 MW project that the latter won at a tariff of 5.59 per kilowatt hour (kWh) in Telangana in August 2015.

As the second part of the transaction, CLP will have the option to acquire the remaining 51% stake in SE Power after a year from the commercial operations date, as allowed under the power purchase agreement (PPA), said CLP and Suzlon in a joint statement on Monday.

The project is expected to be commissioned by May 2017 with 80% funding by debt and 20% in equity, the statement said. The net worth of SE Solar as on 31 March is 30 crore, the statement said.

The 100 MW plant is part of a 210 MW project for which Suzlon received letters of interest (LoI) in January and has signed long-term PPAs with state utilities. Suzlon will still build the project on engineering, construction and procurement (EPC) basis and hold 51% for a year after the commercial operation date, as mandated by the PPA.

The local unit of Hong Kong-listed CLP Holdings Ltd is planning to invest about $1 billion to set up more than 1 gigawatt (GW) of solar power capacity over the next 3-5 years. India aims to set up 100 GW of solar capacity and 60 GW of wind capacity by 2022.

“India is a primary growth market for CLP and the Veltoor solar project will make an important contribution to CLP’s expansion plan. Besides, it will aid CLP to meet its target of having 20% of power generated by renewable energy by 2020," CLP India said in the statement.

CLP India is one of the largest wind power developers in the country with a capacity of about 1,000 MW spread across six states and is the latest to announce its entry in the fast-growing solar energy market, which in recent months has seen overseas power firms, including Finnish utility Fortum Oyj, make large investment commitments.

The firm entered the Indian power sector in 2002 with the acquisition of a 655 MW gas-fired plant in Gujarat. It also operates a 1,320MW supercritical coal-fired power plant in Haryana.

A number of renewable energy producers are also looking for investors and partners to finish their pipeline of committed projects. Merger and acquisition (M&A) activity in the sector too has been on the rise with the entry of global financial investors including pension funds and sovereign wealth funds.

Last week, Tata Power Co. Ltd agreed to buy clean energy company Welspun Renewables Energy Pvt. Ltd in a $1.38 billion deal, making it the largest transaction in the country’s renewables sector.

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