Cantor Fitzgerald running sales process, Acme Solar recently sold projects to Actis Long Life Infrastructure Fund and Petroliam Nasional Bhd owned Amplus
NEW DELHI: In what may rank among the largest green energy deals in India, Acme Solar Holdings Ltd. is looking to sell 4.84 gigawatt (GW) of solar projects, said three people aware of the development.
This assets sale process from India’s largest pure-play solar platform is being run by Cantor Fitzgerald (Hong Kong) Capital Markets Ltd and comes in the backdrop of resumption of deal activity in India’s green energy space, home to the world’s largest clean energy programme.
An Acme Solar spokesperson in an emailed response said, "Below information is not correct," and added, "Our core strength is developing and constructing high quality solar assets and we will continue to do so. We don’t intend to sell any of our under construction assets."
“Of course as a part of our capital raise strategy, we will either churn operating assets or raise capital at the platform level," the spokesperson said. "We would strongly advice you to not publish anything else as it will be purely speculative."
Queries emailed to Cantor Fitzgerald on 17 September remained unanswered.
According to the sale process documents reviewed by Mint, “Cantor Fitzgerald has been mandated to advise on the sale of a 4.84 GWp portfolio of operating and under-construction solar assets in India (“Project Wiley")."
“Portfolio consists of 4.84 GWp of solar assets spread over 12 states, with 25-year PPAs in place at a ₹3.55/kWh weighted average tariff," the document stated.
This sale of assets code-named “Project Wiley" comes after Acme Solar Holdings Ltd explored a plan for a proposed infrastructure investment trust (InvIT) and an initial public offering (IPO). Acme Solar recently sold two solar projects totalling 400MW to Actis Long Life Infrastructure Fund (ALLIF) and 100 MW to Petroliam Nasional Bhd owned Amplus.
“At 2.21 GWp of operational capacity, and a further 2.63 GWp of in- construction capacity, the transaction perimeter represents one of the largest solar positions in the whole of India, and provides the opportunity for an acquiror to become a significant player in the market through a single acquisition," the sale process document said.
The group founded in 2003 by Manoj Kumar Upadhyay has been looking at new businesses such as energy storage, green hydrogen and ammonia.
Storage has become the next frontier in India’s green economy given its ambitious clean energy targets and the intermittent nature of electricity from clean energy sources. In such a situation, large grid-scale battery storages can help maintain spinning reserves to support round-the-clock demand for electricity.
Mint recently reported that Greenko Energy Holdings plans to invest around $1 billion in a new battery storage business which also includes production of lithium-ion batteries in the country for power grid-scale applications and electric vehicles.
“Acme Solar is perhaps the last of entirely promoter-owned large green energy platform left in India," said a person cited above, requesting anonymity.
“Portfolio is expected to generate ~ ₹1,600 Cr of EBITDA in FY2021 at a margin of 93%, representing 21% YoY growth in EBITDA," the sale documents added.
EBITDA is earnings before interest, tax, depreciation and amortization.
“The first phase of the process will be launched on 21 September, with the non-binding offers to be made by 19 October. The binding offer is expected to be made by mid-December this year," said a second person cited above who also did not want to be named.
The proposed deal comes in the backdrop of India’s clean energy space being in a state of churn, with power procurement curtailment and tariff-shopping by state-run power distribution companies (discoms). Banks are also wary of lending to developers as they suspect the viability of projects that have agreed to sell power at rock-bottom tariffs. There are also issues regarding delay in payments by discoms, besides transmission and connectivity related challenges.
However, foreign investors have been attracted by India’s green economy. The latest case in point being the single-largest foreign clean energy investment announcement of $980 million in India by Japan’s ORIX Corp. for buying a 17% stake in Greenko Energy Holdings.
Green energy projects now account for more than a fifth of India’s installed power generation capacity. India aims to have 175 GW of clean energy capacity by 2022, including 100GW from solar projects. The country has 34.6GW of solar power.