Cana­dian Pen­sion Fund to Buy 40% in CLP In­dia for $368 m

CDPQ deal to value CLP In­dia at $920 m; co to use funds to grow port­fo­lio in low-car­bon ar­eas

The Economic Times - - Companies: Pursuit Of Profit - Our Bureau

Mum­bai: Cana­dian pen­sion fund man­ager Caisse de dépôt et place­ment du Québec (CDPQ) agreed to ac­quire 40% stake in CLP In­dia for $368 mil­lion (`2,645 crore), valu­ing the com­pany at $920 mil­lion. The deal that ends months of ne­go­ti­a­tions is the largest fundrais­ing through pri­vate in­vest­ment in the Indian re­new­ables sec­tor.

CLP In­dia is the wholly-owned lo­cal arm of Hong Kong-listed CLP Hold­ings (for­merly China Light & Power) and is one of the largest for­eign in­vestors in the Indian power sec­tor. The par­ent will re­tain 60% share­hold­ing in the Indian arm. The pro­ceeds will be used to ex­pand its port­fo­lio in low-car­bon ar­eas.

The trans­ac­tion is sub­ject to reg­u­la­tory ap­provals.

“The Indian mar­ket has been, and will con­tinue to be, a pri­mary growth mar­ket for CLP and CDPQ,” CLP said in a state­ment to the Hong Kong stock ex­change. “CLP and CDPQ are aligned on the strat­egy for CLP In­dia and it is en­vis­aged that with the strate- gic back­ing and fi­nan­cial sup­port of both share­hold­ers, CLP In­dia will pur­sue a faster path of growth to a long-term sus­tain­able busi­ness with a larger and more di­ver­si­fied port­fo­lio. CLP In­dia will seek to ex­pand in­vest­ments in low-car­bon growth ar­eas in­clud­ing re­new­able en­ergy in­vest­ments as well as non-gen­er­a­tion busi­ness op­por­tu­ni­ties in trans­mis­sion, dis­tri­bu­tion and other cus­tomer­fo­cused busi­nesses.”

ET was the first to re­port on this im­pend­ing trans­ac­tion, March 14.

CLP en­tered the coun­try in 2002 with the ac­qui­si­tion of a 655-MW gas-fired power plant in Gu­jarat and has since ex­panded its port­fo­lio of op­er­at­ing con­ven­tional and re­new­able as­sets to over 3 gi­gawatts, mak­ing it one of the largest in the space in In­dia. Its green en­ergy port­fo­lio of over 1.1 GW is spread across eight states. CLP In­dia was the first power com­pany in South Asia and South­east Asia to is­sue cor­po­rate

CLP In­dia was the first power co in South Asia & South­east Asia to is­sue corp green bonds

on

green bonds, as well as the first power com­pany in In­dia to is­sue an as­set-spe­cific bond.

While sec­tions of the se­nior man­age­ment in Hong Kong have been bullish on In­dia, the par­ent’s board has not been will­ing to in­fuse ad­di­tional eq­uity to fund growth, sources said. CLP In­dia was one of those in the race to ac­quire Anil Am­bani’s Mum­bai dis­tri­bu­tion busi­ness for over $2 bil­lion but had to even­tu­ally with­draw. The pro­ceeds from the CDPQ deal will be used to fund ac­qui­si­tions and bulk up the port­fo­lio in gen­er­a­tion as well as­trans­mis-

sion and dis­tri­bu­tion.

CDPQ is Canada’s sec­ond-largest pen­sion fund with $286 bil­lion of as­sets un­der man­age­ment. It is al­ready back­ing NYSE-listed so­lar en­ergy de­vel­oper Azure and bank­ing on the Indian gov­ern­ment’s am­bi­tious clean en­ergy tar­get of 175 GW by 2022. While 100 GW of the tar­geted ca­pac­ity is to come from so­lar projects, 60 GW is ex­pected to be gen­er­ated from wind. The pen­sion fund man­ager wanted to fund Tata Power’s Wel­spun ac­qui­si­tion and formed an $850 mil­lion joint plat­form called Resur­gent Power Ven­tures.

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