Canada’s CDPQ eyes stake in CLP India

New Delhi: Canada’s second largest pension fund Caisse de dépôt et placement du Québec (CDPQ) is looking to acquire a stake in CLP India Pvt. Ltd, one of the largest foreign investors in the Indian power sector, said two people aware of the development.

CDPQ’s interest in the Indian subsidiary of Hong Kong Stock Exchange-listed CLP Holdings Ltd comes in the backdrop of a few Indian clean energy firms offering scale. With 1,000 megawatt (MW), CLP India has one of the largest wind power portfolios in the country. In addition, CLP India has an installed capacity of 2,000MW from coal, gas and solar projects.

Not only does the presence of the Canadian pension fund boost inflow of foreign investor capital in the green energy space, it reinforces an emerging pattern of foreign players exploring the Indian market. Financial resources often act as a constraint in green projects, given the high level of initial capital investment; pension funds can not only access a large corpus but they can deploy it for a longer period.

“CDPQ is looking at an equity investment in CLP India,” one of the two people cited above said, on the condition of anonymity.

The second person cited above, who also didn’t wish to be identified, confirmed the development. “The investment is being planned at the Indian company level,” the person said.

Mint couldn’t ascertain the potential value of the transaction.

The development comes at a time when large Indian clean energy firms such as Goldman Sachs-backed ReNew Power Ventures Pvt. Ltd, Singapore’s sovereign wealth fund GIC Holdings Pte. Ltd and Abu Dhabi Investment Authority-backed Greenko Group and International Finance Corp. (IFC)-backed Hero Future Energies Pvt. Ltd, are actively scouting for assets to augment their portfolios.

A CDPQ spokesperson said in an emailed response: “I’m sorry to tell you that I can’t help you because we never comment on market rumors or on transactions we might be considering or not considering at all.” An external spokesperson for CLP India, in an emailed response, said, “At CLP, as a policy, we do not comment on market speculation’.

With $286 billion worth of assets under management, CDPQ has been investing in sectors like power, infrastructure, logistics and financial services in India. CDPQ’s interest comes at a time when the largest global green energy expansion programme is unfolding in India.

CLP Holdings, founded in 1901 as China Light and Power Co. Ltd in Hong Kong, is among the two significant overseas entrants in India’s power generation sector along with US-based AES Corp. While it had articulated its intent in 2012 about withdrawing the India operations, it later changed its plans. CLP is one of the largest investor-owned power businesses in the Asia Pacific and is present across Hong Kong, China, India, South-East Asia, Taiwan and Australia across fuel sources such as coal, gas, nuclear and renewable.

Experts say that the Indian clean energy sector is witnessing consolidation.

“FY2017-18 had significant scale-down in renewable procurement by Indian utilities, while the focus is on execution of contracted capacities. There is consolidation, with some of the early investors either entirely cashing out or taking on board investors with deep pockets and longer investment horizons,” said Debasish Mishra, partner with Deloitte Touche Tohmatsu India LLP.

The big deals that are lined up, and reported by Mint, include ReNew Power Ventures’s planned acquisition of global private equity firm Actis Llp’s Ostro Energy Pvt. Ltd; Munjal family-promoted Hero Future Energies—looking to acquire Orange Renewable from Singapore-based AT Capital Group—and Subhash Chandra’s Essel Infraprojects Ltd selling its solar business.

The National Democratic Alliance government has set an ambitious clean energy target of 175 gigawatts (GW) by 2022. While 100GW of the government’s targeted renewable energy capacity is to come from solar projects, 60GW is expected to be generated from wind power plants.