Gentari, GIC set to invest $1.75 billion in AM Green unit

A unit of Malaysia’s Petronas, Gentari, will invest $1.5 billion for 30% in AM Green Ammonia Holdings, valuing the company at $5 billion. The founders will hold the balance 70% along with Singaporean wealth fund GIC, which will invest $250 million. Citigroup is the financial adviser to AM Green for this transaction.

These entities are likely to announce the deal shortly, along with an overall investment plan of $5.5 billion (including equity and debt funding by all stakeholders, including promoters) for producing 5 million tonnes of green ammonia annually in Tamil Nadu, Karnataka, Andhra Pradesh, Himachal Pradesh and Gujarat.

The plan also involves exporting green ammonia, produced at among the lowest costs globally, to South Korea, Japan, Singapore and Germany.

Bloomberg had earlier reported about Petronas nearing a deal to acquire a minority stake in the ammonia unit of India’s AM Green for about $1.6 billion.

Global oil companies such as energy giant Shell Plc, TotalEnergies and Thailand’s PTT Group have already established a significant presence in India’s green energy sector as the conventional hydrocarbon space undergoes disruptions. Gentari has also been actively eyeing opportunities presented by India’s green energy transition. GIC is already a shareholder in the Greenko Group, along with other big investors such as Abu Dhabi Investment Authority and Japan’s ORIX Corp.

The AM Green Ammonia Holdings deal comes against the backdrop of India announcing its target to achieve net zero carbon emission by 2070 at the 26th session of the United Nations Framework Convention on Climate Change (COP26). With the exports to Organisation for Economic Co-operation and Development countries, the green ammonia play will also help reduce their net-zero targets.

Green hydrogen is generated by breaking down water in an electrolyzer. The hydrogen produced can then be combined with nitrogen to make ammonia, avoiding hydrocarbons in the production process. Green ammonia is the most economical and safe way to transport green hydrogen. It is also used in fertilizer manufacturing. India aims to produce 5 million tonnes of green hydrogen by 2030. AM Green Ammonia Holdings’ output alone will account for the usage of 1 million tonnes of green hydrogen.

AM Green’s playbook involves being present across the green hydrogen value chain, including supplying round-the-clock green energy and manufacturing electrolyzers through another unit—AM Green Technology & Solutions—that will also house the group’s joint venture (JV) with Belgium’s John Cockerill. The JV is building one of the world’s largest electrolyzer factories in India to supply 6.5 gigawatts (GW) electrolyzers to AM Green Ammonia. AM Green also has plans to set up a global renewables and storage business and make green chlorine, green methanol, and green caustic soda through another subsidiary, AM Green Molecules.

Queries emailed to the spokespeople for Greenko Group, Gentari, GIC and Citigroup on Sunday afternoon remained unanswered.

In June last year, Petronas set up Gentari to accelerate the adoption of clean energy and build a renewable energy capacity of 40GW. The unit has plans to produce 1.2 mtpa of green hydrogen and set up electric vehicle charging points across the Asia Pacific with a focus on Malaysia and India.

Greenko has so far invested $7.5 billion in building India’s largest operational clean energy portfolio of 7.3 gigawatts (GW). It is building 50 gigawatt-hours (GWh) of storage capacity on pumped storage technology as part of its plan to set up an energy storage cloud platform of 100GWh.