Two of India’s leading renewable energy majors ReNew Power and Greenko are said to be in negotiations with Abu Dhabi Investment Authority (ADIA) and couple of other long-term investment funds based in the Middle East to raise funds, solar industry and investment banking sources said.
ADIA is already an investor in both Greenko and ReNew Power, holding significant minority stakes.
The amount that the Indian two Indian companies are planning to raise is understood to be in the range of $600-800 million. This could be done through a mix of equity and long-term debt, sources said.
The proposed fundraising plans by ReNew Power and Greenko are to finance their pipeline projects in the renewable energy sector, especially their solar power projects.
Both ReNew Power and Greenko have about 2 GW and in excess of 8 GW capacities respectively in their pipeline projects in the renewable energy sector.
When contacted, the ReNew Power spokesman declined to comment on the company’s proposed fund raising plans. Arabian Business has contacted Hyderabad-based Greenko for comment.
In addition, ADIA also declined to comment.
The move to tap its existing stakeholders and new long-term investors for raising additional funds by the two India renewable energy majors follow the uncertainty over their plans to raise capital from the Indian market due to the prevailing volatility in the capital market and liquidity crunch following the IL&FS imbroglio.ReNew Power, which has already filed the Draft Red Herring Prospectus (DRHP) with market regulator SEBI (Securities Exchange Board of India) as a precursor to hitting the market with an initial public offer (IPO), is yet to take a call on its proposed issue plan.
Industry sources said with the prevailing market conditions and liquidity situation, it is unlikely that ReNew Power will decide to hit the market any time soon.
Arabian Business reported on October 4 that a large number of Indian infrastructure project developers and promoters are expected rush to international markets, including that in the Gulf region, to tie-up long-term funds to finance their upcoming projects in the wake of payment crisis at IL&FS, leading to a liquidity crunch in the Indian market.
“With the solar power tariff nose diving to Rs 2.50-Rs.275/per unit in the latest reverse bidding rounds, promoters and developers are forced to scout for low cost funds from overseas markets to be able to make their projects economically viable,” Pranav Mehta, Chairman, National Solar Energy Federation of India (NSEFI), told Arabian Business.
“Middle East market, especially the sovereign and long funds based out of UAE, have been a favourite source for raising long-term funds by the Indian solar power developers.”
Debt cost
The cost for solar power companies to raise debt from the Indian market currently hovers around 10 – 11 percent, which will put a heavy burden on the project developers who have bid solar projects at ‘ultra low’ tariff in the recent bidding rounds, according to Pranav Mehta, who is also the Chairman-elect of Global Solar Council.
Both Greenko and ReNew Power have gone in for big ticket M&A deals recently, which have also necessitated their need for further fund raising to finance their portfolio projects. ReNew Power has announced acquisition of Ostro Energy in April this year in a deal then valued at around $1.5 billion, the largest M&A deal in India in the renewable energy sector.
The Greenko acquisition of Orange Renewable from Singapore’s AT Capital Group happened mid-this year at an enterprise value of $1 billion.
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