The Shapoorji Pallonji Group, which has been making several efforts to monetize its assets to reduce debt, on Monday said its arm Shapoorji Pallonji Infrastructure Capital has signed an agreement to sell 317 megawatts (MW) of solar assets to private equity firm KKR. The total transaction size is worth ₹1,554 crore (about $204 million).
The sale includes 169MW of solar projects in Maharashtra and 148MW in Tamil Nadu. The deal is part of a wider process at the Shapoorji Group to deleverage its balance sheet.
Shapoorji Group’s debt problems surfaced in November, soon after it took group company Sterling and Wilson Solar Pvt. Ltd public. The Shapoorji Group raised ₹1,920.6 crore by selling a part of its stake in an initial public offering (IPO), promising investors that part of the proceeds would be used to clear the loans they had taken from Sterling and Wilson. But the promoters soon sought an extension for repaying the loans, blaming “significant and rapid deterioration in the credit markets".
Mint reported last month that the group was in talks with lenders to raise up to $1 billion by pledging its stake in Tata Sons Pvt. Ltd, the holding company of the Tata Group. Shapoorji holds 18.2% stake in Tata Sons. The group has also put up other assets on sale, including it roads business and the water purifier and vacuum cleaner business Eureka Forbes.
For KKR, this is 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. According to Hardik Shah, managing director at KKR, this transaction is part of the PE firm’s strategy to buy assets backed by long-term contracts and stable cash flows.
“If you look at KKR’s infrastructure investment strategy, what we have done in North America or Europe, we are quite focused on contracted and regulated type assets because we have a strong focus on downside and capital protection. IndiGrid is a prime example of that and renewable assets with long-term power purchase agreements with centre and state governments fit very well with our strategy since you have a very defined set of cash flows," said Shah.
“Renewables is a growing industry but the market is fragmented and so we do feel that there will be opportunities to acquire more assets," he said.
“Our aim is to build out a renewable operating platform," added Shah.
“We are truly pleased to extend our Infrastructure franchise in Asia and India through this investment in a world-class portfolio of fully operational solar energy projects. Given the growing demand across Asia Pacific for sustainable energy solutions, we also see this as a great example of how KKR can bring capital and expertise to assets to help meet the demand for infrastructure development," said David Luboff, head of Asia Pacific Infrastructure at KKR.