SBG Cleantech also plans to raise around $500 million through a dollar bond
Bank of America and Barclays have been appointed for running the stake sale and bond raise process
New Delhi: Japan’s SoftBank Group Corp wants to sell its entire stake in SBG Cleantech, and is in separate talks with Canada Pension Plan Investment Board (CPPIB), Abu Dhabi government’s sovereign wealth fund Mubadala Investment Company and Brookfield Asset Management Inc for the same, said two people aware of the development.
As part of its strategy, SBG Cleantech also plans to shortly raise around $500 million through a dollar bond, with Bank of America (BofA) and Barclays being appointed for running the stake sale and bond raise process.
This change in plan follows SoftBank’ previous mandate to Mizuho Bank for finding a ‘significant’ minority investor. SBG Cleantech, is a joint venture between SoftBank and Bharti Enterprises, wherein the Masayoshi Son headed firm holds 80% stake.
A SoftBank spokesperson in an emailed response said, “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 SoftBank. SBG Cleantech has invested around $800 million for its 7.7 GW Indian solar portfolio. The Economic Times newspaper on 1 July reported about SB Cleantech having approached Brookfield for a $500-600 million funding infusion.
Spokespersons for CPPIB and Bank of America declined comment.
Queries emailed to spokespersons for Bharti Enterprises, Mubadala, Brookfield, Barclays and Mizuho on Friday evening remained unanswered.
Analysts say that Indian solar space has been plagued by execution related issues such as delays in land acquisition, regulatory and financial closures.
“The domestic solar capacity addition in FY2019-20 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 FY2020 due to the Covid-19 pandemic. The solar capacity addition in FY 2020-21 is further expected to remain subdued given the continued execution challenges post lockdown restrictions," said ICRA in a statement on Monday.
Son, 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 companies 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.
CPPIB has a presence in India’s clean energy pace and has invested in ReNew Power, one of India’s leading clean energy companies. It among other firms has evinced interest in acquiring a 51% stake in Tata Power’ renewable energy InvIT, and a majority stake in Finland’s state-controlled power utility Fortum Oyj’s 500 megawatts (MW) Indian solar projects respectively as reported by Mint earlier.
Experts said Canadian foreign pension funds such as CPPIB are India bound as the country fits the risk profile given that the markets here have matured from the early risk stage. Also, these pension funds represent the so-called patient capital, which seeks modest yields over time.
Mubadala Investment owns Masdar, also known as the Abu Dhabi Future Energy Co., that acquired around 20% in Hero Future Energies Pvt. Ltd in November last year for $150 million. Last month it also bought a 1.85% stake in Jio Platforms for Rs9,093.60 crore.
There is a continuing overseas interest in India’s green economy. Last week’s auction conducted by state-run Solar Energy Corporation of India Ltd (SECI) was dominated by foreign clan energy firms. The lowest bid of Rs2.36 per unit was placed by Spain’ Solarpack Corporación Tecnológica, S.A., followed by Italy's Enel Group, Canadian firm’ AMP Solar Group’s India unit, France’ EDEN Renewables and Ib Vogt Singapore Pte ltd who placed the second lowest tariff bid of 2.37 per kilowatt-hour (kWh). UK’ CDC Group-backed Ayana Renewable Power and Goldman Sachs backed ReNew Power placed the third lowest bid of Rs2.37 per unit each.