NEW DELHI :
The Adani Group, private equity firm KKR and Edelweiss Infrastructure Yield Plus Fund have separately evinced interest in acquiring 810 megawatt (MW) solar projects of Mahindra Susten, the renewable business arm of Mahindra group, said two people aware of the development.
The deal, potentially valued at about $530 million, is set to rank among the largest in India’s green energy space. It comes after CLP India emerged as the final buyer of Mahindra Susten’s 160 MW solar assets that were put on the block earlier.
“Mahindra Susten has put the projects up for sale. There is interest from the likes of Adani, KKR and Edelweiss," said the first of the two people cited above requesting anonymity.
This interest comes against the backdrop of India unveiling its next generation power sector reforms that include privatization of electricity distribution companies (discoms) in all eight union territories and a new tariff policy which proposes a cost-reflective tariff, penalty on unjustified power cuts and limiting cross-subsidies.
Mahindra Susten, which builds and sells solar power projects, has commissioned over 967MW till date, and has over 668MW of projects under execution.
Spokespersons for Mahindra Susten and Edelweiss declined to comment.
An Adani Group spokesperson in an emailed response said, “We do not comment on market speculations." Queries emailed to a KKR spokesperson on Monday night remained unanswered.
Even as one of the world’s strictest lockdown enforced by India to combat the coronavirus pandemic has led to a drop in the country’s power demand, interest in India’s renewable energy space continues.
The renewable energy industry has been facing a tight lending environment, mounting dues from utilities and record low tariffs. Low solar and wind power tariffs have made banks wary of lending to renewable energy developers as they are unsure of the viability of the projects.
India is running what it hopes will become the world’s largest clean energy programme with an aim of having 175GW of clean energy capacity by 2022 as part of its global climate change commitments. It plans to add 100GW of solar capacity by 2022, including 40GW from rooftop projects.
The developers’ interest also reflects India’s per capita power consumption, which, at about 1149 kilowatt-hour (kWh), is among the lowest in the world. In comparison, the world’s per capita consumption is 3600 kWh.
Analysts say that such transactions are good news for the sector.
“It is a normal practice internationally for developers to sell projects after they have completed construction and de-risked investments. In fact, growing M&A is a positive news for the sector as it brings in new capital from long-term investors and allows developers to recycle their capital to build new projects. We expect many developers to be looking for project sales because there are few other exit opportunities and they need to release funds for new projects," said Vinay Rustagi, managing director at consulting firm Bridge to India.
With French energy giant Total SA as its joint venture partner, Adani Group, owned by the billionaire Gautam Adani, has been looking for solar assets.
KKR and Edelweiss Infrastructure Yield Plus Fund’s Sekura Energy Ltd have also been active in India’s clean energy space.