IPO-bound Singapore’s Sembcorp Industries Ltd’s Indian renewable energy business and Hexa Climate Solutions are vying to acquire the entire India renewable business of Italy’s Enel Group in a deal having an equity and enterprise value of around $100 million and $300 million, respectively, according to two people aware of the development. Sembcorp is present in India throughSembcorp India Private Limited and Sembcorp Green Infra Ltd (SGIL) along with other subsidiaries., while Hexa is backed by I Squared Capital.
The HSBC-run sale process follows a deal signed last year—which later fell through—under which Waaree Energies Ltd had agreed to buy 100% of Enel Green Power India Pvt Ltd (EGP India) from its parent Enel Green Power Development S.R.L. for ₹792 crore. Mint first reported on 15 November 2023 that Enel Group planned to exit its India renewable business.
“Enel Group’s entire India renewable business is back on offer again and Sembcorp and Hexa are in talks for it,” one of the two people cited above said, requesting anonymity.
Enel Green Power India’s portfolio comprises 760 megawatts (MW) of operational wind and solar assets, and a development pipeline of 2.5 gigawatts (GW). The company has been present in India’s renewable sector since 2015 and in 2020 it partnered with Norway’s state-owned investment fund Norfund to jointly finance, build and operate new renewable projects in the country.
Enel Group had earlier also explored opportunities in India’s power distribution sector, including the proposed privatisation of Puducherry’s electricity utility. It had also submitted non-binding offers earlier to acquire Reliance Infrastructure Ltd’s Delhi electricity distribution businesses.
The development comes as both Sembcorp and Hexa are ramping up their India portfolios.
Last year, Sembcorp acquired 300MW of solar projects from Nasdaq-listed ReNew Energy Global Plc. The Singapore Exchange-listed company currently has a renewable portfolio of 20.4GW across 11 countries, with India accounting for 7.6GW.
Also last year, Hexa Climate Solutions acquired Finnish state-run energy power utility Fortum Oyj’s renewable energy platform Fortum India Pvt Ltd (FIPL) along with its management company and carbon credit portfolio.
On its part, Hexa’s backer I Squared Capital plans to invest around $500 million in the company that has a focus on renewable energy, water and carbon offsets, and has a 2.5GW development pipeline.
Spokespersons for Enel Group and HSBC, as well as Hexa Climate Solutions’ founder and executive chairman Sanjeev Aggarwal declined to comment. Queries emailed to Sembcorp Industries Ltd on Thursday evening remained unanswered till press time.
Tough times
This comes at a time when India’s green energy sector is facing several challenges. These include curtailment of renewable power in Rajasthan and Gujarat, two of the country’s largest renewable-producing states; discoms selling renewable power on exchanges at prices below procurement cost; and states such as Uttar Pradesh, Bihar, Assam and West Bengal signing costlier coal-based power purchase agreements (PPAs) instead of cheaper green power.
In addition, 43GW of renewable capacity involving investments of ₹2.1 trillion currently lacks PPAs or power supply agreements (PSAs).
However, analysts say India’s commercial and industrial (C&I) segment continues to attract strong investor interest and is expected to grow exponentially.
“The commercial and industrial segment is expected to see renewable energy (RE) capacity rise to 57GW by fiscal 2028, from 40GW expected by the end of fiscal 2026,” Crisil Ratings said in a 26 February statement.
Crisil noted that the capacity addition will be driven by five factors—favourable long-term PPA tariffs vis-à-vis on-grid tariff, net-zero targets, renewable purchase obligations (RPOs) for corporates, as well as attractive returns and strong counterparty profiles for developers.
“C&I capacity additions will be mostly undertaken by developers backed by private equity players, spurred by better return on equity of C&I projects vis-à-vis utility-scale projects on account of higher tariffs. This will be underpinned by the presence of counterparties with strong credit profiles, ensuring stable cash flow generation,” the statement added.
Expanding dealscape
India currently has a renewable energy capacity of 258GW, of which solar accounts for 135.80GW, and wind, 54.51GW. With the government setting a target to auction 50GW of renewable power annually, the pace of capacity addition has picked up significantly.
Several renewable energy deals are currently underway in India, as reported by Mint. These include alternative investment firm Stonepeak seeking up to a 15% stake in AM Green’s holding company in a potential deal having an equity value of around $1.4 billion.
Separately, billionaire B.K.Goenka’s Welspun World has tasked EY to sell a majority stake in its green energy platform at an equity value of around $100 million.
In another proposed transaction, the International Finance Corp (IFC), Munich-headquartered Siemens AG, and Singapore’s Fullerton Fund Management plan to acquire a 49% stake in Gurugram-based green hydrogen manufacturer Hygenco Green Energies Pvt. Ltd.
Meanwhile, the country’s largest oil refiner and marketing company Indian Oil Corporation’s (IOC’s) renewable energy subsidiary Terra Clean Ltd plans to acquire a 50% stake in renewable energy firm Fourth Partner Energy Pvt. Ltd (FPEL) in a deal having an equity value of around $400 million.
In addition, Morgan Stanley and Mitsubishi UFJ Financial Group, Inc. (MUFG) in October launched the sale process of Global Infrastructure Partners (GIP)-owned Vena Global Group Pte Ltd’s complete sale of its Indian green energy platform Vena Energy India, in a deal having an enterprise value of around $1 billion.