Private equity fund Actis LLP plans to set up a new firm to house its operational renewable energy assets in India, attracted by the nation’s growing green economy.
Actis will likely accommodate the solar projects of Essel Group in the new firm that the private equity fund plans to acquire in a deal valued at around $600 million, said a person aware of the development. It also plans to acquire around 200 megawatts (MW) of Shapoorji Pallonji group’s solar assets through Sprng Energy Pvt. Ltd.
The third firm being set up by Actis which is focused on the renewable energy space follows India’s largest clean energy deal wherein ReNew Power Ventures acquired Ostro Energy Pvt. Ltd from Actis LLP at an enterprise value of $1.5 billion last year. Actis plans to grow Sprng Energy to 1.75 gigawatts (GW) from its present 750MW portfolio.
“The new firm will house the operating assets for setting up a yield-based product. It will be a new platform wherein the bulk of the focus will be on renewable. It may also house roads and transmission assets," said the person cited above.
Backed by Actis, Ostro Energy grew through a prudent renewable energy auction strategy entailing an equity investment of $280 million and a debt of about $900 million. It helped Ostro Energy leapfrog from one 50MW project in Rajasthan to 1.1GW when it was sold.
Actis India’s playbook is guided by the size of the clean energy business here. India is ranked fifth globally in terms of installed renewable energy capacity, according to the government. India has a solar installed capacity of 24.33GW, with another 22.8GW capacity under implementation, although there are concerns about the asset quality.
Mint reported on 28 November about Actis LLP agreeing to buy Essel Infraprojects Ltd’s solar power projects. “The Essel deal is on and has an enterprise value of around $600 million. The Shapoorji Pallonji assets are expected to have an enterprise value of around $200 million," said the person cited above.
Essel Infra put its solar assets on the block in early 2018 and has spent most of the year negotiating with potential buyers. Essel has 685MW of installed capacity and under-construction projects. Shapoorji’s portfolio currently comprises seven operational projects with a total capacity of 272MW and an additional 130MW under development.
An Actis spokesperson declined to comment.
An external spokesperson for Shapoorji Pallonji group in an emailed response said: “The Group would not like to respond to market information and would be making suitable announcements when appropriate."
An Essel Group spokesperson in an emailed response said: “Essel Infra’s solar asset divestment process is in progress as per the planned approach. At this stage, we do not wish to comment on any other information and the same will be communicated when the deal concludes, since we are bound by confidentiality agreements signed with the potential suitors."
Ostro Energy and Solenergi are among the energy platforms that Actis has created globally, following Globeleq Meso America in Central America, Zuma Energia in Mexico, Aela Energia in Chile and Atlantic Renovaveis in Brazil.