Home >Industry >Energy >Hero Future explores fresh stake sale in its clean energy business

NEW DELHI : Hero Future Energies Pvt. Ltd is exploring a fresh stake sale in its clean energy business and has asked HSBC to find a buyer, two people aware of the development said.

“The plan is at a preliminary stage with HSBC been asked to explore the opportunities available," said one of the two people cited above requesting anonymity.

The size of the stake the promoters of unlisted Hero Future plan to sell and the valuation they are seeking could not be ascertained.

Rahul Munjal-led Hero Future plans to sell the stake to raise growth capital for the company’s expansion.

Last November, the company sold around a 20% stake for $150 million to Masdar, also known as Abu Dhabi Future Energy Co. The deal valued the New Delhi-based company at $750 million.

Masdar is owned by the UAE’s sovereign wealth fund, Mubadala Investment Co. Also, International Finance Corporation (IFC), part of the World Bank, had invested $125 million in Hero Future in 2017.

Queries emailed to spokespeople for Hero Future, Masdar, and IFC on Sunday evening remained unanswered. A spokesperson of Hongkong and Shanghai Banking Corp. Ltd in India declined to comment.

With an installed capacity of 1.3 gigawatts (GW) and an additional 1.5GW under construction, Hero Future plans to build a 5GW portfolio by 2022 with a presence in Africa and India.

There is a growing consolidation in India’s clean energy space.

Potential deals reported by Mint earlier include a proposed 51% stake sale in Tata Power’s renewable energy InvIT, and a majority stake sale in Finland’s state-controlled power utility Fortum Oyj’s 500 megawatts (MW) solar projects in India.

Green energy projects make up more than a fifth of India’s installed power generation capacity.

India has 34.6GW of solar power and 38GW of wind power. The country has become one of the top renewable energy producers globally, with an ambitious capacity expansion plan to achieve 175GW by 2022 and 500GW by 2030, as part of its climate commitments.

There is a continuing overseas interest in India’s green economy. An auction in June by state-run Solar Energy Corporation of India Ltd (SECI) was dominated by foreign clean energy firms.

The lowest bid of 2.36 per unit was placed by Spain’s Solarpack Corporacion Tecnologica SA, followed by Italy’s Enel Group, Canadian firm AMP Solar Group’s India unit, France’s EDEN Renewables, and Ib Vogt Singapore Pte Ltd.

All four placed the second-lowest tariff bid of 2.37 per kilowatt-hour (kWh). UK’s CDC Group-backed Ayana Renewable Power and Goldman Sachs-backed ReNew Power placed the third-lowest bid of 2.38 per unit each.

There are, however, concerns plaguing the sector such as debt financing for green energy projects drying up, with large Indian banks declining to fund projects that have committed to selling power at less than 3 per unit. The banks are wary of lending to developers as they suspect the viability of the projects.

There are also concerns about some state governments wanting to renegotiate clean energy contracts.

The latest being the Punjab government led by chief minister Amarinder Singh seeking a discount from solar power developers due to low interest rates and a financial crunch exacerbated by the coronavirus pandemic. Punjab’s move comes on the heels of a widely criticized attempt by the Andhra Pradesh government led by chief minister Y.S. Jagan Mohan Reddy to renegotiate clean energy tariffs.

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