KKR plans to own multiple independent platforms for renewable energy assets in India, a key market for the global private equity giant, where it is betting on infrastructure and financial services to consumer technology.
KKR is vying for larger assets, such as Sprng Energy and Gentari, directly through its Asia fund, rather than via its renewable energy platform, Serentica. "The idea is to have multiple energy platforms in the country," said a person with knowledge of the firm's strategy.
“The assets are large, and Serentica does not have the debt gearing or equity to finance those deals. The firm is planning to bid independently. Renewables is a sector they are globally betting big on,” said a second person aware of the matter–both spoke on the condition of anonymity.
KKR, along with Blackstone, Brookfield, Actis, and Macquarie are ramping up their India bets and have been looking at building platforms by acquiring assets. That contrasts with the playbook of many global energy majors, which have either exited the country or are looking to sell, given high valuations.
A KKR spokesperson declined to comment in an emailed response.
Substantial investments
The PE giant has made substantial investments in Serentica, including a $400 million commitment in 2022 and an additional $250 million in 2023. Last year, KKR helped Serentica acquire the Indian solar business of Norwegian state-owned company Statkraft for an enterprise value estimated between $220-250 million (about ₹1,942-2,207 crore).
In a media roundtable held in November last year, Scott Nuttall, KKR’s global chief executive, said it sees India as one of its key markets. “We are going to deploy more in healthcare, but we’re also going to expand across consumer, technology, and financial services as well as in infrastructure, including renewables, roads, transmission grids, and data centres,” Nuttall had said.
The firm has invested $9 billion across private equity (PE), debt and infrastructure in the last five years locally.
Earlier this year, global oil major Shell Plc put its India renewable energy business Sprng Energy on the block. The deal, valuing the company at $1.7-$1.8 billion, has seen a lot of interest from players such as National Investment and Infrastructure Fund (NIIF), Sembcorp, Blackstone, Macquarie, Actis, among others. Similarly, Gentari India, the Malaysia energy group’s local arm, is looking to sell a controlling stake in the company and has seen interest from the large buyers mentioned above, Mint reported.
Green challenges
Despite hitting record installation milestones, India's green energy sector continues to face challenges: nearly 44 gigawatts of awarded projects remain stranded without power purchase agreements, cash-strapped discoms are shunning solar due to stagnant demand, and exchange prices have crashed to near-zero levels during peak generation hours.
Many companies in the renewable and energy space owned by global private equity firms or strategic investors such as Vibrant Energy, Statkraft Group and Zelestra have either sold or are looking to sell their India portfolio.
India is targeting net-zero emissions by 2070, aiming to reach 500 GW of renewable energy by 2030 and a 45% reduction in greenhouse gas emissions intensity.
India’s renewable energy capacity grew from 78 GW in FY15 to 199 GW in FY24, with solar accounting for 80% of it. To meet its 500GW target by 2030, 90 GW is under construction and 44 GW is at the development stage. The government plans to tender 50 GW annually until FY28. Experts say this will drive mergers and acquisitions, PE investments and consolidation.