The acquisition of 41.6% stake in Avaada Energy Pvt. Ltd for about $454 million finally gives PTT Group an entry into India after unsuccessful attempts earlier
NEW DELHI :
Thailand energy major PTT Group’s acquisition of 41.6% stake in Avaada Energy Pvt. Ltd for about $454 million finally grants the state-owned firm an India entry after unsuccessful attempts earlier.
The announcement of largest-ever investment from Thailand into India was made by PTT’s unit, Global Power Synergy Public Co. Ltd, on Tuesday. Global Power Synergy said its subsidiary Global Renewable Synergy Company Ltd (GRSC) had completed the acquisition in Avaada Energy controlled by entrepreneur Vineet Mittal. The deal reflects the growing interest of global oil and gas majors in India’s emerging green economy.
Mint reported on 22 February about PTT Group’s interest in buying a stake in Avaada Energy Pvt. Ltd, which has an operational portfolio of 1.39 gigawatt (GW) with a further 2.35 GW under implementation. PTT Group was earlier also looking to buy a stake in ReNew Power Ventures Pvt. Ltd, but the deal was called off.
“The government of India has set a policy to support the investment in clean energy, with the goal to expand the electricity capacity of renewable energy from 73 gigawatts to 450 gigawatts by 2030. The company, therefore, considers India as one of the focus countries for the renewable energy business expansion," Global Power Synergy Public Company Limited said in an announcement to Thailand Stock Exchange on Tuesday.
While Bank of America was the sell side advisor to Avaada, Khaitan & Co was the legal advisor to PTT. Avaada Energy is Mittal’s second innings in the green energy space after Tata Power bought the entire 1.1 GW renewable energy portfolio of Welspun Energy Pvt. Ltd for $1.4 billion.
The deal activity in India’s clean energy space continues unabated despite the coronavirus pandemic that originated in Wuhan, China. The interest from oil majors has been accentuated as the conventional hydrocarbon space undergoes technological disruptions amid a growing focus on environmental, social and governance (ESG) investing.
A case in point is Malaysia’s state-run oil and gas firm, Petroliam Nasional Bhd or Petronas, acquiring Amplus Energy Solutions Pvt. Ltd in 2019. Also, French energy giant Total formed an equal joint venture with Adani Green Energy Ltd. Royal Dutch Shell has also invested in Cleantech Solar Energy that has a 500-megawatt (MW) portfolio in countries, including India. Petronas was also looking to buy about 10% stake in Tata Power Renewable Energy Ltd, in addition to investing in Tata Power’s renewable energy infrastructure investment trust, but the deal didn’t go through.
Italy’s Eni SpA, Norway’s Statoil ASA and Russia’s Rosneft are among other global oil majors that have shown interest in India’s clean energy space.
“The investment in this platform aligns with the company’s growth strategy in renewable energy business internationally and enhances the company’s expertise in the solar power generation as well as the business collaboration in the area of the company’s renewable energy business in the future. In addition, Avaada aims to expand its renewable energy portfolio in accordance with significant growth expected in electricity demand in India," the announcement added.
India is running the world’s largest clean energy programme to achieve 175 GW of renewable capacity, including 100GW of solar power by 2022. According to the Central Electricity Authority, by 2030, the country’s power requirement would be 817GW, more than half of which would be clean energy.
This has led to deal-making opportunities in this space. Some of these deals include Adani Green Energy Ltd agreeing to buy SB Energy India for an equity value of around $625 million. The deal, which has an enterprise value of around $3.5 billion, follows the collapse of an earlier plan to sell SoftBank’s entire 80% stake in SB Energy to Canada Pension Plan Investment Board.
Also, private equity firm Actis Llp has inked an agreement to buy 500 MW of solar projects in India owned by Finland’s state-controlled power utility Fortum Oyj for around €280 million and Singaporean conglomerate Keppel Corp. is among suitors for Warburg Pincus LLC’s majority stake in rooftop solar power producer CleanMax Enviro Energy Solutions Pvt. Ltd. The other deals include Denmark’ state-owned fund IFU, United Nations Office for Project Services S3i, Brookfield Renewable Partners and Norway’s Scatec acquiring stakes in separate solar projects of Acme Solar Holdings Ltd in Rajasthan.
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