GAIL mulls buying wind energy assets of IL&FS

India’s biggest gas utility is considering acquiring all of the wind energy assets held by a subsidiary of a troubled shadow bank, according to people familiar with the matter. GAIL India is looking to buy 775 Mw of wind energy assets from IL&FS Energy Development, a unit of IL&FS, and has approached investment bankers to advise on a possible deal.

India’s biggest gas utility is considering acquiring all of the wind energy assets held by a subsidiary of a troubled shadow bank, according to people familiar with the matter.

GAIL India is looking to buy 775 megawatts (Mw) of wind energy assets from IL&FS Energy Development, a unit of Infrastructure Leasing & Financial Services (IL&FS), and has approached investment bankers to advise on a possible deal, the people said, asking not to be named as the talks are private. The discussions are at a preliminary stage and a decision to bid hasn’t been made, they said.

A deal will give the state-run company an opportunity to add to its existing renewable energy portfolio of 129 Mw and help offset emissions.

For IL&FS, the asset sales are key to revive the beleaguered shadow lender whose payment defaults have sparked fears of a contagion across the financial system in the country.

An IL&FS spokesman declined to comment, while GAIL’s spokeswoman didn’t immediately respond to emailed queries. GAIL had ~32.4 billion ($451 million) of cash, cash equivalents and short-term investments as of March 31, according to data compiled by Bloomberg.

The wind energy assets held by the IL&FS unit are about 2 per cent of the country’s installed capacity in the segment. IL&FS’s newly formed board said at the end of last month that resolution options could broadly involve significant capital infusion, asset sales and debt restructuring at group, business vertical or asset level.