Shell hires Ambit for Sprng valuation before stake sale

Sprng had 2.1 GW of operational clean energy projects, and 7.5GW in the pipeline when Shell bought it. The pipeline of projects has grown about 800 MW since. (Reuters)
Sprng had 2.1 GW of operational clean energy projects, and 7.5GW in the pipeline when Shell bought it. The pipeline of projects has grown about 800 MW since. (Reuters)

Summary

  • MNC energy giant plans to sell minority stake in operational assets of Sprng Energy

Shell Plc has mandated Ambit Group to conduct a valuation exercise before it sells a minority stake in the operational assets of Sprng Energy group, said two people aware of the development.

Shell acquired Sprng Energy in 2022 from Actis Llp at an enterprise value of $1.55 billion. At the time, Sprng had 2.1 gigawatt (GW) of operational renewable energy projects, and 7.5GW in the pipeline; since then, it has added around 800 MW more of capacity to the pipeline. Mint had reported that Shell Plc was looking to sell a stake in the operational assets of Sprng Energy group.

In response to a query on mandating Ambit Group to conduct a valuation exercise, a Shell spokesperson said,“There is no strategic review of the Sprng Energy group. As stated at Capital Markets Day in June, we are working to grow our renewables portfolio as part of an integrated power business in the key market of India. We continue to develop new projects while exploring partnering opportunities with investors who want to deploy capital on derisked operational assets, with Shell retaining a stake in such assets. This focus on capital discipline will enable Shell to further accelerate growth of our renewables portfolio."

Queries emailed to an Ambit Group spokesperson remained unanswered till press time.

Shell, which employs around 10,000 in the country, is not new to India’s energy economy. The company runs a liquefied natural gas (LNG) terminal at Hazira on India’s west coast. It has 350 fuel retail stations across eight states and last year launched its electric vehicle (EV) charging service called Shell Recharge. It has invested in Indian new energy companies such as Husk Power, d.light, Orb Energy and Cleantech Solar through its New Energies division set up in 2016, as it aims to become a profitable net-zero emissions energy business by 2050.

Global energy companies such as Shell, Malaysia’s state-run Petroliam Nasional Bhd subsidiary Gentari Sdn Bhd, Total 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 in particular has also been actively eyeing opportunities presented by India’s green energy transition, with its recent plans to invest $1.5 billion equity in a unit of AM Green, set up by the founders of Greenko group Mahesh Kolli and Anil Kumar Chalamalasetty and 100% owned by them.

India’s green energy space has seen tremendous interest, given the country’s ever-increasing demand for power. According to the World Energy Outlook 2023 released by the International Energy Agency’s (IEA) last month, the total investment in clean energy supply and clean technology manufacturing in India would double by 2030 from $60 billion in 2022.

The report, however, noted that in order to achieve the country’s net zero emission targets, investments in clean energy sectors needs to triple to $180 billion by the end of this decade.

A recent KPMG report added that by 2047, when India aims to become a developed nation, annual investments worth $350 billion-$400 billion would be required to meet the country’s ambitious clean energy targets.

Deal activity in India’s green energy space has been growing.

Mint reported on Monday about India’s quasi sovereign wealth fund National Investment and Infrastructure Fund (NIIF) backed Ayana Renewable Power Pvt. Ltd looking to sell a significant majority stake in the green energy firm that may translate into up to 100% stake sale at an equity valuation of around $2 billion.

In addition to the stake sale of the existing shareholders, the company is also looking to raise around $400 million as primary equity infusion.

The country recently set a new record, with peak power demand reaching 239.9GW on 1 September, exceeding the Central Electricity Authority’s projections of 230GW.

India has an installed renewable energy capacity of 179GW, with an additional 128GW either under development or bid out. India plans to meet 50% of its energy requirements from renewable assets by 2030 and increase non-fossil fuel power generation capacity to 500GW by the end of this decade.

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