Essel Group will sell 205 megawatt (MW) of its operational solar energy assets to Adani Green Energy Ltd at an enterprise value of ₹1,300 crore, the two companies said.
An Essel Group statement said the assets are in Punjab, Karnataka and Uttar Pradesh and have long-term power purchase agreements (PPAs) with various state-owned power distribution companies (discoms).
The deal is expected to close by end September, when Subhash Chandra‘s Essel Group must repay about ₹7,000 crore to creditors as agreed earlier this year. This is the second asset sale by Essel, after a recent stake sale in its entertainment business.
Mint first reported in June that Essel was in talks to sell part of its solar portfolio to Adani Green Energy. Out of its 685MW solar portfolio, about 310MW is operational, while the rest is under construction. Essel said that after the sale of 205MW to Adani, it is now working to sell the rest 480 MW as well. All the solar projects were won under the National Solar Mission and state government auctions.
This is the first acquisition of operating assets by Adani Green Energy, the Gautam Adani-led renewable energy company said in a separate statement. It added that the portfolio it is acquiring is relatively young with average remaining PPA life of approximately 22 years.
“Our asset divestment process is well within the purview of the agreed timelines with our esteemed lenders. The sale of the group’s solar assets to Adani Green Energy Ltd (AGEL) is yet another positive step taken in this direction. We have maintained a constant process of identifying the right potential partner for the sale of our precious infra assets and we are extremely glad to sign the agreement with AGEL. The group remains focused towards its commitment made to its lenders and is confident to complete the overall repayment process," Essel said.
Jayant Parimal, CEO of Adani Green Energy, said in a separate statement, “The acquisition of 205MW of operating solar assets strengthens Adani Green Energy’s position as one of India’s premier renewable power producers, with a total portfolio of about 5.5GW, of which 2.5GW is operational, and the remaining is to be operationalized over the next two years."
Promoters of Essel Group have debt of ₹11,000 crore. Essel Group companies together owe another ₹11,400 crore separately.
To repay this, the promoters recently agreed to sell an 11% stake in Zee Entertainment Enterprises Ltd, the group’s flagship media and entertainment firm, for ₹4,224 crore to US-based Invesco Oppenheimer Developing Markets Fund.
Last October, Essel Infra sold two operating power transmission assets to Sekura Energy Ltd, backed by Edelweiss Infrastructure Yield Plus fund.