Blackstone eyes Zelestra's India ops in $421 mn deal

Zelestra, backed by European alternative asset manager EQT, has hired investment banker JP Morgan for the transaction codenamed Project Orange, the people said on the condition of anonymity. A deal is likely at equity and enterprise values of $184 million and $421 million respectively.

Zelestra India has an operational capacity of 600 megawatt (MW), with another 2 giga watt (GW) contracted portfolio, of which 1.5GW is under construction. The green energy platform is targeting 8.6GW capacity by 2031.

“Blackstone has big plans for India’s green energy space and plans to set up a new platform in the country," said one of the two people cited above, requesting anonymity.

Blackstone, which manages assets of $1.2 trillion globally, has invested $50 billion in India across sectors such as real estate, healthcare, data centers, technology and private equity. EQT manages assets of €273 billion worldwide.

The Zelestra transaction follows last December's sale of EQT and Temasek-backed renewable energy firm O2 Power to JSW Neo Energy for an enterprise value of $ 1.47 billion. Mint earlier reported about Zelestra sounding out Brookfield, JSW Group, Singapore’s Sembcorp Industries Ltd, Serentica and Macquarie for a potential sale of its India business.

A Zelestra spokesperson in an emailed response said, “We never comment on M&A activity."

“At Serentica, we are committed to playing our part in accelerating India's energy transition and decarbonizing hard-to abate industries," a Serentica spokesperson said in an emailed response.

“We continue to explore potential partnerships and acquisition opportunities on an ongoing basis but as policy do not comment on specific plans," the Serentica spokesperson added.

Spokespersons for Blackstone, EQT, JSW Group, JP Morgan, and Macquarie Group declined comment. Queries emailed to the spokespersons of Brookfield and Sembcorp on late Wednesday night remained unanswered till press time.

Zelestra, which operates 29GW across 13 countries, has been present in India since 2015. Its portfolio has firm and dispatchable renewable energy (FDRE) projects that leverage energy storage to provide round-the-clock power on demand, hybrid, and solar projects to supply electricity to utilities and commercial and industrial (C&I) consumers. India’s C&I segment has attracted strong investor interest, driven by the nation’s projected green energy trajectory, as well as rules allowing large power users to source energy from the open market rather than the costlier grid.

Many global strategic investors and utilities are currently finding their home markets relatively more attractive, said Sanjeev Aggarwal, founder and executive chairman of New York-based I Squared Capital backed Hexa Climate Solutions. "That said, India remains a fundamentally deep and high-growth market. Once the current volatility subsides, the sector is likely to offer a more balanced risk-reward equation, which will reinvigorate long-term strategic interest," Aggarwal said.

India has an installed renewable energy capacity of 245GW, of which solar and wind power account for 116GW and 52GW respectively. India’s playbook is to add 50GW of green energy capacity annually to reach 500GW renewable capacity by 2030. Given the country’s green energy transition trajectory and its 2070 net zero target, the plan is to add 1,800GW of renewable energy capacity by 2047 and 5,000GW by 2070. This ambitious scale has opened up several mergers and acquisitions opportunities, sparking interest from several global and domestic investor.

Recently, Mint reported that Actis Llp is among half a dozen bidders shortlisted to conduct due diligence of Vibrant Energy, the energy platform of Macquarie Asset Management Green Investment Group. The transaction, codenamed Project Notos, has an enterprise value of around $600 million. Apart from General Atlantic owned Actis, the others in fray for Vibrant Energy are Singapore’s Sembcorp Industries Ltd, Torrent Power Ltd, and INOXGFL Group’ Inox Green Energy Services Ltd.

Separately, Japan’s financial services firm Orix Corp. has sold its 17.5% stake in Greenko Energy Holdings to AM Green B.V., owned by Greenko Group founders Anil Chalamalasetty and Mahesh Kolli; ONGC NTPC Green Pvt. Ltd bought National Investment and Infrastructure Fund (NIIF) backed Ayana Renewable Power Pvt Ltd; and a joint venture between the Philippines' Ayala Corp.-owned ACEN and UPC Renewables is planning to sell a significant stake in its upcoming 1GW projects in India.