Hyderabad/New Delhi: Greenko Group has agreed to buy Orange Renewable from Singapore’s AT Capital Group at an enterprise value of $1 billion, Greenko Group founder Mahesh Kolli said.
Greenko, backed by sovereign wealth funds GIC Holdings Pte Ltd and Abu Dhabi Investment Authority, will make an equity payout of around $300 million, said Kolli, who is also president and joint managing director of Greenko.
Once the transaction is completed, Greenko’s total renewable energy operational capacity will increase by 1 gigawatt (GW) to 4.2GW, the second largest in India after ReNew Power Ventures Pvt. Ltd. The Hyderabad-based company also has 600 megawatts (MW) of clean energy projects under construction.
“The Orange transaction will be value-accretive to Greenko immediately," Kolli said in an interview.
Orange Renewable, a unit of AT Holdings Pte Ltd, is among India’s largest renewable energy platforms.
The portfolio of New Delhi-based Orange Renewable, founded by Singapore resident Arvind Tiku, comprising wind and solar power projects was up for sale for some time, with Rothschild having been given the mandate to find a buyer. Queries emailed to Tiku on Friday evening remained unanswered.
Sudhir Nunes, chief executive officer, wind business at Orange Renewable, in an emailed response, declined to comment “on market speculations".
An external spokesperson for Rothschild said that the investment banker does not comment on past or ongoing deals as a policy.
There is growing consolidation in India’s renewable energy sector, with ReNew Power in April acquiring Ostro Energy Pvt. Ltd from private equity fund Actis LLP. Acquired at an enterprise value of $1.5 billion, Ostro Energy’s 1.1GW of renewable assets boosted ReNew Power’s portfolio to around 5,600MW.
In 2016, Greenko acquired SunEdison’s Indian assets at an enterprise value of $392 million, which includes debt. The other large deal in the Indian renewable energy space include Tata Power Co. Ltd’s acquisition of the entire 1.1 GW renewable energy portfolio of Welspun Energy Ltd at an enterprise value of $1.4 billion in June 2016.
India’s green energy tariffs have hit a record low, making access to cheap funds a key criterion for success. This has resulted in the quest for so-called patient capital, which seeks modest yields over time.
Orange Renewable’s assets had many suitors, including ReNew Power. The talks collapsed because of differences over valuation between ReNew Power and AT Capital.
Greenko Group and Hero Future Energies Pvt. Ltd entered into separate talks for the assets, Mint reported on 14 November. Sembcorp Industries Ltd was also eyeing the same assets, Mint reported on 2 March. The Economic Times newspaper on 8 March said Greenko was close to a deal to buy Orange Renewable.