Post the transaction, ORIX will have a 17% stake, with GIC and ADIA stake coming down to 56% and 14% respectively. Founder' stake will also come down to around 13%
NEW DELHI :
In the single largest foreign investment in India’s clean energy space, ORIX Corp. is set to invest $980 million in Greenko Energy Holdings; the Japan’ financial services firm said in a statement.
The deal will also add 873 MW of Orix’ operating wind assets to Hyderabad-based Greenko’s portfolio, and will contribute $100 million to Greenko’s EBITDA in the first year. The deal will also peg GIC Holdings Pte. Ltd and Abu Dhabi Investment Authority (ADIA) backed Greenko’s equity and enterprise value at $5.75 billion and $10.2 billion respectively.
EBITDA is earnings before interest, tax, depreciation and amortization. Greenko posted a revenue of $661 million for the year ended 31 March, 2020.
ORIX is a major player in the renewable energy business in Japan which includes solar, wind, biomass, power trading and retailing. With 1 GW portfolio, it is also one of the largest corporates in the Japanese solar power generation market.
The two sovereign funds— GIC and ADIA— have so far infused $2.2 billion into Greenko, which was founded by Mahesh Kolli and Anil Kumar Chalamalasetty. While GIC and ADIA currently hold 65.8% and 16.5%, respectively, in Greenko, Kolli and Chalamalasetty own the remaining 17.7%.
Post the transaction, ORIX will have a 17% stake, with GIC and ADIA stake coming down to 56% and 14% respectively. Kolli and Chalamalasetty’ stake will also come down to around 13%. The transaction is expected to be completed by the end of the year.
“In addition to acquiring Greenko’s issued shares from the founders’ group, ORIX will integrate its entire wind power generation business in India into Greenko in exchange for Greenko’s new shares," the Orix statement said.
The Economic Times newspaper on Friday reported about the deal.
The addition of these wind projects that NYSE listed Orix had acquired from bankrupt Infrastructure Leasing and Financial Services (IL&FS), will take Greenko’s portfolio near-term capacity to 6.5 gigawatt (GW).
“In addition to an existing total capacity of about 4.4 GW operating renewable portfolio in India—such as solar, wind, and hydro, Greenko recently announced a 1.2 GW hydro asset acquisition and has additional capacity under construction and in development of over 8 GW," the Orix statement said.
ORIX, one of the world’s largest diversified financial services groups based in Japan, has been a significant shareholder in IL&FS since 1993. IL&FS sold its 51% stake in seven operating wind power assets, with 874 MW of generation capacity, to ORIX for Rs806 crore.
“In 2016, ORIX entered India’s wind power business (with a total facility capacity of 873 MW) through a joint investment. The assets were fully acquired by ORIX in 2019," the statement added.
The deal comes at a time when India’s clean energy space is going through a churn with power procurement curtailment and tariff shopping by discoms. Also, India’s clean energy tariffs have been very low with solar power tariffs hitting a record low of ₹2.36 per unit.
Greenko is building power storage projects with total capacity of 7.2 GW across six states in India as part of its plan to provide on-demand power from wind and solar projects, and is also partnering with state run NTPC Ltd to develop ‘round-the-clock’ power supply.
“Greenko is focused on building integrated renewable energy projects (IREP), business which supplies electricity from renewable sources that is not affected by the weather at costs equivalent to thermal power stations and similar facilities. This is achieved by combining renewable energy sources—such as solar and wind power—with pumping-storage hydro," the statement said.
Greenko Group also wants to be present in the electricity distribution scape and submitted non-binding offer to buy Reliance Infrastructure Ltd’s Delhi electricity distribution businesses. Enel Group of Italy and Torrent Power Ltd also submitted their non-binding offer for the same.