Mumbai: Abu Dhabi Future Energy Company PJSC, also known as Masdar, one of the largest developers of renewable energy in the Middle East, is picking up a minority stake in the renewable energy company Hero Future Energies Pvt. Ltd owned by Rahul Munjal of Hero Group, according to a filing made to the Competition Commission of India (CCI).
The offer was filed for an approval from CCI on 28 October under the green channel route for mergers & acquisitions, which allows fast and automatic approvals for clean energy projects.
The transaction will see Masdar pick up equity stake in overseas entities that control Hero Future Energies Pvt. Ltd, as well as subscribing to non-voting compulsorily convertible preference shares in the company.
While further details of the transaction could not be ascertained, The Economic Times reported on 2 October that Masdar may buy a 20% stake in Hero Future Energies for $150 million.
Hero Future has presence across 10 states in India with an operating asset base of approximately 1,200 megawatts (MW) across wind, solar (grid connected) and rooftop plants. In 2017, it had raised $125 from International Finance Corp.
The Masdar-Hero deal marks a rare entry of a new growth equity investor in an Indian renewable energy producer in recent times.
The sector has been going through a phase of consolidation, with lack of low cost capital availability forcing small renewable energy developers to sell assets to bigger well established platforms funded by financial investors such as private equity, sovereign wealth funds and pension funds.
In August, Essel Infraprojects Ltd, wholly owned by Subhash Chandra’s debt-heavy Essel group, sold its operating portfolio of 205 megawatts (MW) to Adani Green Energy at an enterprise value of ₹1,300 crore. Mint reported on 26 September that Essel is also in talks with the Adani group to sell its remaining solar energy portfolio of around 480 MW.
In May, Mint had reported that global energy major Royal Dutch Shell and Norway’s state utility Statkraft and CLP India are in the race to buy Morgan Stanley Infrastructure Partners-owned wind energy platform Continuum Wind Energy.
The previous major fresh equity investment in the renewable sector was seen in February 2019 when EverSource Capital and the National Investment and Infrastructure Fund Ltd (NIIF) announced a partnership with the CDC Group, the UK's development finance institution, to invest $330 million in its renewable energy platform, Ayana Renewable Power.
Established in 2006, Masdar has invested in renewable energy projects with a combined value of $8.5 billion, with Masdar’s own investment share worth $2.7 billion. The investment spans across several fully developed or under development projects in UAE, Uzbekistan, Jordan, Mauritania, Egypt, Morocco, the UK, Serbia and Spain. The gross electricity generating capacity of these projects is 2.7 gigawatts (GW).