Essel Infraprojects Ltd, a part of the Subhash Chandra-led debt-laden Essel Group, has agreed to sell about 310 megawatts (MW) of solar energy assets to the Adani Group at a valuation of ₹1,800-2,000 crore, said two people aware the development.
This would be the third sale for Essel Infra, which aims to monetize assets to pay off creditors.
Of its total solar energy portfolio of 685MW that Essel Infra won under the National Solar Mission and state government auctions, about 310MW is currently operational. The projects for generating the remaining 375MW are under construction.
“Essel Infra has reached an agreement with the Adani Group to sell its operational portfolio at ₹5-6 crore per megawatt. This will help Essel pay back the debt on these assets, while the remaining will be return on equity for the company," said the one of the two people mentioned above.
The Essel Group has tried to sell the solar assets in the past year. Talks with renewable energy company Greenko had reached advanced stages in early 2018. This was followed by talks with private equity investor Actis in December last year. However, both deals failed to fructify. In February 2019, Essel Infra initiated talks with ACME Solar Holdings, another solar power developer, but this deal also fell through.
“The calling card for Essel Infra’s solar assets is that they have higher tariffs, an average of ₹5.50 per kilowatt hour (kWh) and in some cases as high as ₹8 per kWh. The operational portfolio has older assets that were won before the tariffs fell sharply," said the other person mentioned above. This is much higher than the ₹2.50-2.80 per megawatt current tariff for solar power.
A spokesperson for the Essel Group said it “does not comment on any speculations", in response to emailed queries from Mint. “The stake sale process of the group’s infra assets is in an advanced stage. Any additional detail cannot be shared because of confidentiality agreements," the spokesperson said.
Publicly-listed Adani Green Energy, which houses the Adani Group’s renewable energy interests, constructs, owns and operates solar and wind power plants. As of December 2018, it had an installed capacity of 1,958MW across 11 states.
The Adani Group did not respond to emailed queries till the time of going to press.
As of December 2018, Essel Infra had total debt of ₹11,466 crore while the promoters owe about another ₹13,000 crore to lenders.
After the Essel Group missed payments to lenders earlier this year, it reached an agreement with lenders to extend the payment deadline to 30 September, during which time it would sell a host of assets in its portfolio to raise cash and repay the lenders.
Mint has reported earlier that Essel Infra has completed the sale of three road assets to Caisse de dépôt et placement du Québec (CDPQ), Canada’s second-largest fund manager, for ₹3,300-3,500 crore last month and raised another ₹3,000 crore by selling two power transmission lines to Sekura Energy Ltd, a company owned by Edelweiss Infrastructure Yield Plus fund.
The debt on Essel Infra’s books will halve after these sales, said the second person mentioned above.