A due diligence process has been started by Adani Green Energy Ltd to acquire SoftBank Group's 80% stake in solar power producer SB Energy after its earlier proposed deal with Canada Pension Plan Investment Board (CPPIB) was called off
NEW DELHI :
Adani Green Energy Ltd (AGEL) is looking to buy Japan’s SoftBank Group Corp.’s majority stake in solar power producer SB Energy, said two people aware of the development.
This follows the collapse of a plan to sell SoftBank’s entire 80% stake in SB Energy to Canada Pension Plan Investment Board (CPPIB) for an estimated $525 million.
Adani Green has begun due diligence of SB Energy, the people cited above said, requesting anonymity. Mint broke the story online on Sunday.
SB Energy has a portfolio of 7.7 gigawatts (GW) in India. Bharti Enterprises Ltd owns the remaining 20% stake in the company. Bank of America and Barclays were handling the sale process. France’s Total has invested $2.5 billion for acquiring a 50% stake in 2.35GW operating solar assets of AGEL and a 20% stake in AGEL. With 3.47GW operational capacity and 15.24GW portfolio, the Adani-Total JV plans to commission 25GW by 2025.
Spokespeople for SoftBank Group, Bharti Enterprises, Bank of America and Barclays Bank India declined to comment about the fresh stake sale plans with Adani Green.
Queries emailed to spokespersons for Adani Group and Total; Raman Nanda, SB Energy’s chief executive; and Rohit Modi, SB Energy’s country head and president-India, on Saturday remained unanswered.
There has been sustained interest in India’s green economy despite the turmoil caused by the pandemic.
India is running the world’s largest clean energy programme to achieve 175GW of renewable capacity, including 100GW of solar power by 2022.
According to the Central Electricity Authority—India’s apex power sector planning body—the country will require 280GW from solar projects by 2030 to meet its power requirement of 817GW by then.
The diversified Adani Group has been on an acquisition spree to grow its green energy portfolio. It recently bought Sterling and Wilson Pvt. Ltd’s 75 megawatts (MW) operating solar projects and Toronto-based SkyPower Global’s 50MW solar project in Telangana. Adani Enterprises Ltd has also partnered EdgeConneX to develop 1GW of data centre capacity over the next decade that will be powered by renewable energy. The valuation of SB Energy in the proposed deal with CPPIB was lower than the one expected by the renewable energy industry. SoftBank invested more than $800 million in the business in the past five years. The stake sale efforts followed SB Energy dropping its plan in July 2020 to raise $600 million through a dollar bond.
SoftBank’s planned deal with CPPIB was in the works for around a year, with CPPIB placing several pre-conditions for SoftBank before finalizing the transaction. These included meeting certain project commissioning deadlines, securing new businesses, bond issuance as well as SoftBank bearing any future liquidated damages liability for acquiring the stake, as reported by Mint earlier.
In an emailed response, a CPPIB group spokesperson said, “We don’t have a comment beyond our response provided on Thursday."
The same spokesperson for CPPIB said on Thursday it “continues to look for opportunities for new investments in India, including in the renewables sector, as part of our Sustainable Energy Group strategy." “CPP Investments is a major investor in India with Canadian $12 billion invested to date, and the country is core to our global, long-term investment strategy," the spokesperson said.
Mint reported on 6 July 2020 about SoftBank’s plan to exit SB Energy in a shift from its earlier plan to find a significant minority investor, and its separate talks with CPPIB, Canada’s Brookfield Asset Management Inc. and Abu Dhabi’s sovereign wealth fund Mubadala Investment Co. for the sale.
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