Private equity investors KKR and Actis are in talks to acquire a solar portfolio of 435 megawatts (MW) from Azure Power Global Ltd, said three people aware of the development. Azure Power is backed by Canadian institutional investor Caisse de dépôt et placement du Québec (CDPQ).
CDPQ is the majority shareholder in Azure Power with 50.9% stake. World Bank’ private-sector development arm International Finance Corporation (IFC) is among other investors in Azure Power, India’s first renewable energy company to list on the US stock market. Azure Power has a pan-India portfolio of over 7 gigawatts (GW). Founded in 2008, it had developed India’s first utility-scale solar project in the following year.
“KKR and Actis are interested in acquiring the portfolio of solar projects from Azure. The transaction is likely to happen at a value of around $200 million-$250 million. Investment bank Avendus Capital is advising Azure on the sale of the portfolio. The idea is to sell operating projects to release capital and use that for new and under-development projects," said the first person cited above, requesting anonymity.
The two private equity firms—KKR and Actis—have been active investors in the Indian renewable sector.
In April, KKR acquired 317 MW of solar assets from the Shapoorji Pallonji Group for Rs1,554 crore (about $204 million). The sale comprised 169MW of solar projects in Maharashtra and 148MW in Tamil Nadu.
For KKR, this was the second investment in Indian infrastructure, following its May 2019 investment in India Grid Trust, an infrastructure investment trust (InvIT) which buys and operates power transmission line assets and is now also planning to expand into solar power.
In February, The Economic Times reported that Actis had agreed to acquire around 600 MW of solar projects from Delhi-based renewable energy company Acme Solar.
According to the second person cited above, the sale of the Azure assets had drawn the interest of several other parties, too, including Brookfield, Edelweiss, Ayana Renewable Power and O2 Power, but the talks have advanced with KKR and Actis. He, too, requested anonymity.
KKR, Actis, Avendus, and Azure Power declined to comment on the development.
Currently, several other renewable energy portfolios are also on the block.
Mint reported on 26 May that Saudi Arabia’s Alfanar Group was looking to sell half its 600-megawatt (MW) wind power projects in India.
Finland’s state-controlled power utility Fortum Oyj is also looking for buyers for its 500-megawatt (MW) Indian solar projects, Mint reported on 1 June. At least six firms—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 the majority stake in the projects, Mint reported.
Mahindra Susten, the renewable energy business of Mahindra & Mahindra is also looking to sell a large chunk of its solar projects, Mint reported.