PremiumJapan’s SoftBank Group Corp. is in separate talks with Canada Pension Plan Investment Board (CPPIB), Mubadala Investment Co. and Brookfield Asset Management Inc. to sell its entire stake in Indian green energy firm SBG Cleantech, two people aware of the development said.
Bank of America (BofA) and Barclays have been hired to run the stake sale process by SoftBank, the people cited above said on condition of anonymity. The investment bankers will also help SBG Cleantech, a joint venture between SoftBank and Bharti Enterprises, to raise around $500 million through a sale of dollar bonds. Talks with CPPIB are at an advanced stage. SoftBank holds an 80% stake in SBG Cleantech.
While SoftBank is open to selling its entire stake, it is still trying to find a ‘significant’ minority investor.
A SoftBank spokesperson said in an emailed response, “SB Energy is exploring potential co-investment partnerships to accelerate the growth of its leading renewable energy platform. Given recent and growing interest in ESG (environmental, social and governance) investments at scale, SoftBank decided to take further steps towards identifying a growth partner. SoftBank is committed to the long-term success of SB Energy." SB Energy Corp. is owned by Masayoshi Son-led SoftBank.
SBG Cleantech has invested around $800 million for its 7.7GW Indian solar portfolio. The Economic Times on 1 July reported SBG Cleantech has approached Brookfield for $500-600 million.
Spokespersons for CPPIB and Bank of America declined to comment. Queries emailed to spokespersons for Bharti Enterprises, Mubadala, Brookfield and Barclays on Friday remained unanswered.
India’s solar space has been plagued by execution-related issues, land acquisition, regulation and financial closure, analysts said.
“The domestic solar capacity addition in FY19-20 has remained lower by about 15% than ICRA’s previous estimate (7-7.5GW), mainly on account of the disruption in supply chain and execution disruption in Q4 FY20 due to the covid-19 pandemic. The solar capacity addition in FY20-21 is further expected to remain subdued," ICRA said in a note on Monday.
SoftBank has written multi-billion dollar cheques in India. The Japanese conglomerate, which started investing in India in 2011, has picked up stakes in several consumer internet firms in India and in the process made unicorns out of several of them.
“Earlier, the plan was to sell a big minority stake. Now, that conversation has broadened for an entire stake sale. While talks have progressed to an advanced level with CPPIB, they have also reached out to Mubadala and Brookfield," said a person aware of the development cited above requesting anonymity.
Canada’s CPPIB is an investor in ReNew Power, one of India’s leading clean energy companies. CPPIB, among other firms, has evinced interest in acquiring a 51% stake in Tata Power’s renewable energy InvIT, and a majority stake in Finland’s state-controlled power utility Fortum Oyj’s 500 megawatts (MW) Indian solar projects, as reported by Mint earlier.
Experts say for pension funds such as CPPIB, India fits the risk profile, given the markets here have matured. Also, these funds represent the so-called patient capital, which seeks modest yields over time.
Mubadala Investment Co. owns Masdar, also known as the Abu Dhabi Future Energy Co., which acquired around 20% in Hero Future Energies Pvt. Ltd in November for $150 million. Last month, it also bought a 1.85% stake in Jio Platforms for ₹9,093.60 crore.
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