Mumbai: Tamil Nadu-based renewable energy company Leap Green Energy Pvt. Ltd is in talks with foreign investor EIG Partners to raise around $200 million through structured debt, said two people aware of the development.
Leap Green, founded in 2006, is promoted by former Formula 1 driver Narain Karthikeyan’s family. Mint first reported in October that Leap Green had started a fundraising process to support the growth of the company.
“EIG Partners is doing a due diligence on the company. They have put in a term sheet to invest around $200 million through structured debt," said one of the two persons mentioned above requesting anonymity as the talks are private.
Part of the capital that Leap Green plans to raise will be used to repay debt while the rest will be used for developing the pipeline of projects, he said.
“Leap Green currently has an operational wind portfolio of 751 megawatts (MW). They will use the capital to build another 400 MW of pipeline that they have. They have around $80-100 million of existing structured debt facilities that they are looking to repay," said the person quoted above.
Emails sent to EIG Partners did not elicit any response. V. Dev Anand, co-founder and executive director, Leap Green, did not respond to calls or text messages.
Last year, Leap Green saw a change in its ownership when The Rohatyn Group, a specialized asset management firm focused on emerging markets, acquired existing investor JPMorgan Asian Infrastructure and Related Resources Opportunity platform, which held a majority stake in Leap Green.
The Indian renewable energy sector has become intensely competitive with falling tariffs, making access to low-cost capital a significant advantage.
Several long-term and patient capital investors, with low-cost capital, have set up platforms to tap the renewables opportunity in the country.
In February, EverSource Capital and the National Investment and Infrastructure Fund Ltd (NIIF) partnered with CDC Group, the UK’s development finance institution, to invest in its renewable energy platform, Ayana Renewable Power. The three partners said they will invest $330 million in Ayana.
Last year, sovereign wealth funds GIC Holdings Pte Ltd and Abu Dhabi Investment Authority (ADIA) said they will invest a combined $450 million (around ₹3,000 crore) in Greenko Energy Holdings, in one of the largest funding rounds by an Indian renewable energy producer.
In April 2018, Canada’s largest pension fund manager Canada Pension Plan Investment Board put in $247 million in ReNew Power Ltd, as part of a total commitment of $391 million. A large part of this fundraising has gone toward consolidating the sector.
Last year, Greenko acquired Orange Renewable from Singapore’s AT Capital Group at an enterprise value of under $1 billion and another 385MW of renewable assets from Skeiron Renewable Energy. ReNew acquired 1.1 GW of renewable assets from PE firm Actis owned Ostro Energy in a transaction worth around Rs10,000 crore.
Several other merger and acquisition deals are in the works in the sector.
On 18 April, Mint reported that Mahindra Susten has started talks to sell around 160 MW of solar assets, while in January Mint reported that Morgan Stanley is seeking an exit from its wind energy platform Continuum Wind Energy.