No plans to raise more equity any time soon: AM Green founder Mahesh Kolli

Greenko founder, president and joint managing director Mahesh Kolli (Photo: Kumar/Mint)
Greenko founder, president and joint managing director Mahesh Kolli (Photo: Kumar/Mint)

Summary

  • Kolli also told Mint in an interview that investors have started to realise that pure-play renewables firms don’t really help decarbonise industries that are the main contributors of emissions

New Delhi: A day after Gentari Sdn Bhd, GIC Holdings Pte Ltd and AM Green promoted by the founders of Greenko announced one of the largest global green ammonia production plan, Mahesh Kolli, the founder-president and joint managing director of Greenko, said in an interview that the group will be raising equity for AM Green Molecules, AM Green Technology and Solutions, and AM Green International at an “appropriate time." AM Green is also in talks with domestic and international lenders to secure debt and construction of the ammonia plant that will begin next week. Once it achieves 5 MTPA green ammonia capacity, AM Green will aim for $4 billion revenue and $1.6 billion Ebitda run rate. Additionally, AM Green Molecules plans to produce 0.5 MTPA of in-situ green hydrogen, 1 MTPA of green e-methanol, and 1.5 MTPA of green caustic soda, green chlorine, and high-value downstream chemicals by 2030, he added. Edited excerpts:

What will this deal mean for the green energy transition of India and the 38-member OECD countries?

This deal marks a humble beginning for our cutting-edge energy transition platform and is a strong validation of our conviction and vision to decarbonize various industries, and hard to abate sectors like refineries, fertilizers, chemicals, steel, aluminum, etc. not only in India but also in Organisation for Economic Co-operation and Development (OECD) markets. As indicated in our press note, our platform will be producing 20% of India’s green hydrogen target, and 10% of the European green hydrogen imports target by 2030.

Our sizable capacity of green molecules will play a crucial role in decarbonizing the Indian industrial sector, and will travel to various OECD markets such as Germany to decarbonize the power sector (by cracking ammonia into hydrogen and burning hydrogen for power generation), to other

European markets for fertilizer use case, to Japan to co-firing alongside coal and for bunkering fuel use case. As such, we are well underway to help accelerate net-zero goals of India and above mentioned global markets.

Will there be more equity dilutions by promoters in AM Green Ammonia Holdings?

AM Green Ammonia platform is fully funded to produce 5 million tonnes per annum (MTPA) of green ammonia. We don’t anticipate a need to raise more equity or equity dilution for the foreseeable future.

Have you finalized the debt portion of the overall investment plan of $5.5 billion for producing 5 million tonnes of green ammonia annually?

We have been speaking to international and domestic lenders for firming up debt for our AM Green Ammonia platform and received favourable feedback given our control over the renewable power input cost (fixed for 25 years, ~70% of the cost of producing green ammonia) and electrolyzer cost with our joint venture with John Cockerill of Belgium. In addition, we also signed a binding green ammonia purchase and sale term sheet with a very reputable customer in Germany and are in the process of announcing incremental similar term sheets. All these factors and fully equity funded status of our platform, ensure bankability or certainty of debt financing at attractive terms. We will start construction of our first million tonnes of ammonia plant by next week and will finalize debt financing for it.

Which entities in South Korea, Japan, Singapore and Germany will import green ammonia and what are the annual turnover and profit projections for AM Green?

We are in late-stage talks with large and reputable buyers of green ammonia in South Korea, Singapore, Japan, Germany, and other global markets. On achieving 5 MTPA green ammonia production, we will be at around $4 billion top line and $1.6 billion on run rate Ebitda basis.

Do you have any listing plans for AM Green Ammonia Holdings?

We are not thinking of public listing. Our entire focus is to create long term and value accretive green molecules platform using our innovative, barrier driver business model and our regulatory and execution capabilities. We have access to one of the lowest priced carbon free round the clock power, assured and cost competitive access to electrolyzers, a highly capable team and access to strategically located land near international ports with access to water and key utilities. With all these key factors, we are well positioned to claim and consolidate lead position in large-scale competitive solutions to decarbonize industries and economies globally.

What are the future plans for AM Green Technology & Solutions and AM Green Molecules. Will this also involve equity stake dilution and are you talking to investors for the same?

AM Green Molecules subsidiary of AM Green will produce approximately 0.5 MTPA of in-situ green hydrogen by 2030 to support replacement of fossil fuels and fossil fuel-based feedstocks with green hydrogen in line with the goals of National Green Hydrogen Mission of Government of India. In addition, this subsidiary will also produce approximately 1 MTPA of green e-methanol and 1.5 MTPA green caustic soda and green chlorine and various high value downstream chemicals by 2030 to enable deep decarbonization of various hard to abate sectors such as bunkering fuel, chemicals, steel, aluminum etc. which traditionally rely on oil and gas derived products.

AM Green Technology & Solution subsidiary of AM Green will house the Joint Venture between AM Green and John Cockerill, Belgium for manufacturing electrolyzers in India aligned with the goals of the National Green Hydrogen Mission. This subsidiary will supply approximately 6.5 GWs of electrolyzers to AMG Ammonia by 2030.

We will plan equity raise for these subsidiaries and for our AM Green International subsidiary at the appropriate time.

Please share the plans for setting up global storage and renewable business?

Under our AM Green international subsidiary, we are fairly advanced in setting up an international renewables, storage and molecules business in geographies such as North America and Europe. The target is to have a sizable renewables and storage business including solar, wind, pumped hydro, and battery storage as well as a green molecules business. In these international markets, we are not only targeting to decarbonize industrial sectors but also various data centers which represent a significant and growing source of carbon emission.

With pure play renewable energy business becoming passé, going forward which are the focus areas in India for global investors?

Most global investors have strong internal and external stakeholder pressure and targets to deploy a significant amount of capital towards energy transition and climate change technologies. Renewables historically helped such investors meet their targets however the investor community has started realizing that pure play renewables don’t really help decarbonize industries and hard to abate sectors which are the majority contributors of carbon emissions. As such, a significant portion of future investment is aligned toward long duration storage and production of green molecules such as green hydrogen, green ammonia, green methanol, green caustic soda and various high value downstream chemicals which will drive the next level deep decarbonization and the acceleration of the net zero journey for India and various OECD markets.

Having said that we think strategic investor group will play a significant role during next couple of years in the green molecules space given that it is a high risk and high return business which they understand and can align themselves to. The financial investor group might struggle to justify their investment into this space due to lack of 15-20 year offtake agreements as is the case with pure play renewables business. As such, significant deployment of such financial capital might wait until the risks in the green molecules space are well understood.

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