Macquarie eyeing Goldman Sachs’ ReNew Power stake3 min read . Updated: 21 Sep 2018, 11:23 AM IST
The interest in Renew Power comes in the backdrop of a reported deferment of its IPO, even as India's renewable energy sector is in a transitional phase
New Delhi: Macquarie Group is among investors who have evinced interest in buying a significant stake from Goldman Sachs Group Inc. in Sumant Sinha-founded ReNew Power Ventures Pvt. Ltd, said two people aware of the development. “Goldman Sachs is interested in divesting some stake in ReNew Power. Some investors, including Macquarie, are looking at it," said one of the two people cited above, requesting anonymity. Another person, who also did not want to be named, confirmed the development. Spokespeople for Goldman Sachs and ReNew Power declined to comment.
“We do not comment on market speculation, so (we) do not have a comment on this," a Macquarie spokesperson said in an emailed response.
The interest in India’s largest clean energy company backed by Goldman Sachs comes in the backdrop of a reported deferment of ReNew Power’s initial public offering (IPO). The Economic Times reported on 20 July on the likely postponement of the ReNew Power IPO.
The company planned to raise ₹ 2,600 crore in fresh capital, while existing private equity investors to sell an aggregate of 94.37 million shares, according to the draft prospectus.
ReNew Power also counts investors such as Asian Development Bank, sovereign wealth fund Abu Dhabi Investment Authority, Canada Pension Plan Investment Board, Global Environment Fund and Japan’s JERA Co. Inc. as its shareholders. These investors, over several tranches, have invested a total of ₹ 6,696.5 crore in the company since 2011.
In February 2017, JERA bought a 10% stake in ReNew Power, valuing the company at $2 billion.
In the run-up to its IPO, ReNew Power had acquired 1.1 GW of renewable assets from Ostro Energy in April at an enterprise value of around ₹ 10,000 crore. The purchase cemented its position as India’s top renewable energy producer.
Founded in 2011 by Sumant Sinha, ReNew Power has 5.85 GW capacity across wind and solar projects. Of this, 3.92 GW is operational.
The interest in Goldman Sachs’ stake in ReNew Power comes at a time when the renewable energy sector in India is going through a transition on account of low tariffs. The ministry of new and renewable energy is also planning to cap India’s solar power tariffs at ₹ 2.5 and ₹ 2.68 per unit for developers using domestic, and imported solar cells and modules, respectively.
In May 2017, India had achieved a record low solar power tariff of ₹ 2.44 per unit. Wind power tariffs had plummeted to a record low of ₹ 2.43 per kilowatt hour (kWh) at an auction conducted by state-run Gujarat Urja Vikas Nigam Ltd last December. In such a scenario, obtaining finance at the lowest cost has become key. Also, India’s wind sector has transitioned from a feed-in tariff regime, which ensures a fixed price for wind power producers, to tariff-based competitive auctions.
India’s clean energy strategy is part of its game plan to reduce its carbon footprint by 33-35% from its 2005 levels by 2030, as part of its commitments to the UN Framework Convention on Climate Change adopted by 195 countries in Paris in 2015.
Deal-making activity is also gaining traction in India’s emerging green economy. Recently, Greenko Group called off its $1 billion plan to buy Orange Renewable from Singapore’s AT Capital Group and investment bank Rothschild Inc. resumed scouting for a buyer for one of India’s largest renewable energy platforms, Mint reported on 11 September.
Of the deals being in play and reported by Mint, the country’s largest electricity trader, PTC India Ltd, is exploring the possibility of exiting its wind power business and is scouting for investors. Also, Fotowatio Renewable Ventures plans to exit its only investment in the Indian solar power space, and Edelweiss Infrastructure Yield Plus Fund, is in talks with Engie SA to buy a significant stake in the French energy firm’s Indian solar business.