Greenko will add $10 billion in assets in 4-5 years: Anil Kumar Chalamalasetty
Greenko founders Mahesh Koli and Anil Kumar Chalamalasetty on the rationale behind the acquisition of Orange Renewables and the renewable energy sector on the whole
Mumbai: Set up in 2006 by first-generation entrepreneurs Mahesh Kolli and Anil Kumar Chalamalasetty, Greenko Group is backed by Singapore’s sovereign wealth fund GIC Holdings Pte. Ltd and Abu Dhabi Investment Authority. Greenko president and joint managing director Kolli, and Chalamalasetty, the CEO and managing director, in an interview spoke about the rationale behind the acquisition of Orange Renewables, besides sharing their views on the sector. Edited excerpts:
Did you pick Orange because there were not many gigawatt size firms available for buyouts?
Mahesh: For us, Orange is not an outcome of a strategic move. Our business model has a combination of inorganic and organic growth. Within that, we have our own matrix. To meet the financial benchmarks, we need to meet certain technical benchmarks. We are working with a large cluster approach in states where we operate. Adding this (Orange) portfolio is within those clusters, and is part of our business model. We did not acquire Orange because it has a gigawatt size portfolio, but because of the clear process that they were following.
How much are you paying for this?
Mahesh: It has an enterprise value of $1 billion, with an equity payout of $300 million. From the single equity cheque point of view, it will be our largest acquisition. In terms of size, SunEdison was larger.
How will this transaction be supported?
Mahesh: We have the balance sheet and the capital right now.
Anil: It will be supported through the cash flow and equity sources. Orange’s existing debt will be passed on to us.
Any more acquisitions after this?
Mahesh: We will continue to look at opportunities as long as they meet our financial and operating framework. We are very particular about our cluster approach and the technologies that come with these assets, and the states in which they operate. It has to make long-term financial returns from the shareholders’ perspective. As long as these two frameworks are working together, we will be willing.
Anil: As long as they are rightly built and have the right commercial agreements, and fall under our long-term views, we will definitely get going with them. We are a $5-billion platform today, with built-in reserves. We see energy as one of the strongest growth sectors; by how it is evolving and transforming. We strongly believe that we have entered a very exciting stage. We are going to add another $10 billion of assets in the next four to five years.
When will you go for your IPO?
Anil: We will not say no to it. But definitely not in the short-term.
Mahesh: We will, at some point in time, but we will only do it when we will be in the Nifty-50 type stocks.
Will ReNew and Greenko be the last of the big green energy firms standing once the ongoing consolidation gets over?
Mahesh: The fundamental difference is that we do not see ourselves as a renewable developer. We are in the energy market and utility market as a segment. Whether it is a ReNew, NTPC or NHPC, for us, the comparison is the energy market.
You have been making a pitch for the electricity distribution business. Where do you stand?
Mahesh: Our electricity distribution plan is driven by consumer access. We are reacting to opportunities.
Anil: Our ambition is to make a difference and impact towards the last mile consumer.
What are the specifics?
Anil: We are working with a lot of R&D companies. We are working with a lot of technology firms. We are trying to understand where the pain points for the consumers are. What are the opportunities which can evolve into energy play? It ranges from micro-grids to transmission and distribution, to storage, and towards electric vehicles. We don’t see distribution as the only bridge to reach the consumers. We are trying to build other opportunities and platforms as well.
On transmission and distribution, we are open to do transactions at the right pricing.
Where do you see the green tariffs going from here?
Mahesh: Tariffs are a function of two things -- the real cost of technology and the returns on which the people are willing to work. This sector has matured to a great extent...Tariffs are stabilising at ₹3 per unit.