India’s renewable energy sector has seen several investments and mergers and acquisitions in the last few years
PTC India Ltd has initiated a formal process to find a strategic investor for its wind power business, two people aware of the development said, adding the country’s largest electricity trader has already reached out to various investors.
PTC India’s subsidiary, PTC Energy Ltd, has around 290 megawatts (MW) of wind assets across Madhya Pradesh, Karnataka and Andhra Pradesh.
“PTC India Ltd recently appointed KPMG to advise it on various fund-raising options and they have launched a formal process for the same.
The process is most likely to see PTC sell a major stake in the wind power business to a strategic investor that can bring in more capital to grow it, or it could also see a complete sale of the 290MW of assets,” said the first of the two persons cited above. These assets could fetch a valuation of around ₹2,000 crore, he said, requesting anonymity as he is not authorized to speak to reporters.
PTC’s wind energy assets are from the feed-in-tariff regime and thus, their tariffs are higher than the current prices at which companies are bidding for projects, which will make them attractive for investors, he added.
India’s wind sector has transitioned from a feed-in tariff regime, which ensures a fixed price for wind power producers, to tariff-based competitive auctions. Access to low-cost finance is a key competitive advantage in an auction-based system.
Mint had reported in August that PTC was considering exit options for its wind energy business as the power trader did not want to invest more in the business, with the industry moving from feed-in tariffs to auctions.
A spokesperson for KPMG declined to comment on the development. “PTC India Ltd is considering various options for funding growth of its subsidiary PTC Energy Ltd (PEL) through getting a suitable strategic investor on Board. KPMG is advising PTC in this matter,” the company said in an email.
India’s renewable energy sector has seen several mergers and acquisitions in the last few years.
Several renewable energy deals are in the works in the Indian market. Mint reported on 4 January that Morgan Stanley was looking to exit its stake in wind energy platform Continuum Wind Energy.
Besides, Fotowatio Renewable Ventures is planning to exit its only investment in the Indian solar power space, and Edelweiss Infrastructure Yield Plus Fund is in talks with Engie SA to pick up a significant stake in the French energy firm’s Indian solar business.
Last year witnessed several major M&A deals in the sector. In November, Mint reported that PE investor Actis LLP has agreed to buy Essel Infraprojects Ltd’s solar power projects for ₹5,500-6,000 crore, while in April 2018, Goldman Sachs-backed ReNew Power Ventures Pvt. Ltd acquired rival Ostro Energy Pvt. Ltd, the company that held buyout firm Actis Capital’s renewable energy assets of 1.1GW, in a ₹10,000 crore deal.
Also in 2018, Greenko Group 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.
Investor interest in India’s renewable energy sector is strong given that India plans to achieve 175 gigawatts (GW) of renewable energy capacity by 2022 as part of its climate commitments, wherein it has promised to achieve 40% of its electricity generation capacity from non-fossil fuel based energy resources by 2030. This includes 60GW from wind power, 100GW from solar power, 10GW from biomass and 5GW from small hydro projects.
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