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
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
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.