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CPPIB’s plan to buy SoftBank’s stake in SB Energy called off

The SB Energy deal has gotten dropped against the backdrop of several preconditions placed by CPPIB, such as meeting certain project commissioning deadlines, securing new businesses, bond issuance as well as SoftBank bearing any future liquidated damages liability for acquiring this stake.Premium
The SB Energy deal has gotten dropped against the backdrop of several preconditions placed by CPPIB, such as meeting certain project commissioning deadlines, securing new businesses, bond issuance as well as SoftBank bearing any future liquidated damages liability for acquiring this stake.

  • SoftBank Group Corp. was planning to sell its controlling stake in SB Energy, which has a 7.7 gigawatts solar power portfolio in India, for an estimated $525 million

NEW DELHI : Japan’s SoftBank Group Corp.’s long-standing plan to sell its controlling stake in solar power producer SB Energy to Canada Pension Plan Investment Board (CPPIB) has been called off, said two people aware of the development.

The deal was in the works for around a year, with CPPIB placing several pre-conditions—also referred to as condition precedents (CPs)—for SoftBank before finalizing the transaction.

These include 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. Each CP had a monetary component attached to it.

“The deal has been called off, and an internal announcement to this effect has been made to employees of SB Energy," said one of the two people cited above, requesting anonymity.

SoftBank was planning to sell its entire 80% stake in SB Energy, which has a 7.7 gigawatts (GW) solar power portfolio in India, for an estimated $525 million. The remaining stake is held by Bharti Enterprises Ltd. Bank of America and Barclays were handling the sale process.

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. Mint reported on 6 July 2020 about SoftBank’s plan to sell its entire stake, 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.

A CPPIB spokesperson in an emailed response said, “We continue to look for opportunities for new investments in India, including in the renewables sector, as part of our Sustainable Energy Group strategy. Since the start of 2021, we have announced an increased commitment to toll roads via IndInfravit, a new JV with RMZ in real estate and a private equity co-investment in animal health. 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."

Spokespersons for Bharti Enterprises, Bank of America and Barclays Bank India declined to comment.

A SoftBank Group spokesperson declined comment.

Queries emailed to Raman Nanda, SB Energy’s chief executive; and Rohit Modi, SB Energy’s country head and president-India, on Thursday remained unanswered till press time.

The valuation of SB Energy was lower than the one expected by the renewable energy industry.

The Economic Times reported on 30 December that 75% of SoftBank’s stake is being transferred to CPPIB, and if the condition precedents are not met, SoftBank will transfer a 5% stake that it is temporarily holding as security for free to CPPIB.

The Canadian pension fund manager has been an investor in real estate, infrastructure, public and private equities, funds and co-investments and credit in India. Its global net assets totalled C$475.7 billion as of 31 December.

There are several clean energy deals that are underway, as reported by Mint earlier. For instance, Macquarie Infrastructure and Real Assets (MIRA), one of the largest foreign infrastructure investors in India, is planning to sell around 450MW of solar power projects for an estimated equity value of around $300 million.

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, by 2030, the country’s power requirement would be 817GW, more than half of which would be clean energy, and 280GW would be from solar energy alone. To achieve the target of 280GW, around 25GW of solar energy capacity would need to be installed every year till 2030.

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