ReNew Power, which until recently was a major acquirer of renewable assets in India, has put 300 megawatts (MW) of solar assets on sale as the company tries to cope with rising uncertainty in the industry, two people aware of the development said.
The move to raise capital through sale of assets comes at a time when the renewable energy sector is facing several challenges. The Andhra Pradesh government’s decision to renege on contracts signed by the previous Telugu Desam Party-led state government to buy power from green energy producers has unnerved investors. Besides, delayed payments by state utility boards have resulted in stretched working capital cycles for companies.
In July, the Y.S. Jaganmohan Reddy government announced that it would cancel the contracts, citing high tariffs. While the matter is currently before the courts, private developers who have signed power purchase agreements (PPAs) with the state government have seen their credit ratings downgraded, pushing up their borrowing costs. ReNew Power has a sizeable presence in the state.
“A lot of the funding coming into renewable energy companies is to largely finance receivables and not necessarily for growth. So, companies with large portfolios can look at this option to free up some capital that can be redeployed elsewhere in their portfolio," one of the two people cited above said on condition of anonymity.
The 300MW solar assets, which have been put up for sale, are located in southern states, the second person said also requesting anonymity. “There is interest from financial investors. Strategic investors have gone slow on mergers and acquisitions in today’s market," he added.
“We do not comment on market speculation," a ReNew Power spokesperson said in an email response to Mint’s queries.
ReNew Power was founded by Sumant Sinha in 2011 and backed by investors, including Goldman Sachs and Canada Pension Plan Investment Board.
In 2018, the company acquired 1.1 gigawatt (GW) of wind and solar power assets from Ostro Energy—one of the biggest acquisitions in the Indian renewable energy space. As of end June, ReNew had a capacity of over 8GW of wind and solar power assets across the country, including commissioned and under-development projects.
On 28 August, Mint reported that Fotowatio Renewable Ventures, the largest Arabian green energy utility, is likely to seek a new buyer for its Indian solar business following delays in the ongoing negotiations with Rahul Munjal’s Hero Future Energies.
Mint reported on 1 August that Mahindra Susten, the renewable business arm of the Mahindra group, which is in the process of selling 160MW of solar assets, has received interest from two potential buyers, CLP India and the Piramal group. In May, Mint reported that Royal Dutch Shell, Norway’s Statkraft and CLP India are in the race to buy Morgan Stanley Infrastructure Partners-owned Continuum Wind Energy.