NEW DELHI :
At least six firms, including Canada Pension Plan Investment Board (CPPIB), Brookfield Asset Management Inc., private equity firms Actis Llp, KKR, Macquarie Group, and Edelweiss Infrastructure Yield Plus Fund, have separately evinced interest in acquiring a majority stake in Finland’s state-controlled power utility Fortum Oyj’s 500 megawatts (MW) Indian solar projects, said two people, requesting anonymity.
Fortum’s move to seek financial investors reflects growing consolidation in India’s clean energy space. With India slowly opening up for business, the deal activity has picked up for the green economy.
The stake sale, run by Kotak Investment Banking, is potentially valued at around €500 million and may rank among the largest in India’s green energy space.
These projects of the third-largest Nordic utility will be brought under a new platform, in which new investors will contribute significant equity.
The total deal value may just fall shy of $1 billion, with this new solar project platform co-funded by Fortum, one of Europe’ largest nuclear and hydropower generators expected to develop around 500MW every year in India and overseas.
“Everything put together may be in the region of $900 million. Whoever buys the majority stake will also put the equity in the new platform. There will be a pre-decided equity contribution. Fortum wants to spread meteorological and weather risks. The renewable energy sector needs massive liquidity and, hence, this stake sale," said the first person.
Spokespersons for Macquarie Group and Actis declined to comment. An external spokesperson for CPPIB said in an emailed response that it does not comment on “speculative reports." An external spokesperson for KKR also declined to respond to an email. Queries emailed to Brookfield, Edelweiss and Kotak Investment Banking on Thursday remained unanswered till press time.
“Fortum’s business model in renewables consists of development, construction and asset management of solar and wind assets. Fortum utilizes partnerships and other forms of cooperation to maintain more asset light structure. As of now, we do not want to speculate on potential plans, but will inform the market if and when appropriate," said Sanjay Aggarwal, managing director, Fortum India Pvt. Ltd.