Ac­tis ex­plores sale of Ostro En­ergy to Re­new Power

Mint Asia ST - - News - BUY TPAL B HASKAR

Global

pri­vate equity firm Ac­tis LLP is ex­plor­ing the sale of Ostro En­ergy Pvt. Ltd to Re­new Power Ven­tures Pvt. Ltd, in a trans­ac­tion that may rank among In­dia’s largest clean en­ergy deals, mul­ti­ple peo­ple aware of the de­vel­op­ment said.

Ostro En­ergy and Solen­ergi are among the en­ergy plat­forms that Ac­tis has cre­ated glob­ally, fol­low­ing Glo­beleq Me­soamer­ica En­ergy in cen­tral Amer­ica, Zuma En­er­gia in Mex­ico, Aela En­er­gia in Chile and At­lantic En­er­gias Ren­o­vaveis in Brazil.

With 648.1 megawatts (MW) of op­er­a­tional wind projects and 460MW of wind and so­lar ca­pac­ity un­der ac­tive con­struc­tion, Ostro plans to build 1,000MW of re­new­able en­ergy projects by 2019.

An­a­lysts say Ostro is an at­trac­tive buy. “If we look at the de­vel­oper land­scape, there are very few plat­forms of­fer­ing scale, as­set qual­ity and trans­parency.

With a port­fo­lio size of al­most 1,000MW, Ostro is one of the most at­trac­tive buy prospects in the sec­tor,” said Vi­nay Rustagi, man­ag­ing direc­tor at con­sult­ing firm Bridge to In­dia.

“Clo­sures (of deals) have been held up be­cause of wide gap be­tween ex­pec­ta­tions of buy­ers and sell­ers. But things are com­ing to a head and we ex­pect fran­tic ac­tiv­ity in the next 12-18 months,” he added.

Mint re­ported on 31 May about the pro­posed sale of Ostro as the exit hori­zon ap­proaches for Ac­tis. The sale man­date has been given to Bank of Amer­ica Mer­rill Lynch.

“Re­new is look­ing at the Ac­tis plat­form. There are not many play­ers who have cap­i­tal at their dis­posal to make such large ac­qui­si­tions,” said a per­son aware of the de­vel­op­ment on con­di­tion of anonymity.

Ja­pan’s JERA Co. Inc. bought a 10% stake in Re­new Power for $200 mil­lion in Fe­bru­ary, be­fore a pro­posed ini­tial share sale of the clean en­ergy firm run by Su­mant Sinha, valu­ing the com­pany at $2 bil­lion.

Apart from Gold­man Sachs Group Inc. and the Abu Dhabi In­vest­ment Author­ity, other in­vestors in Re­new Power in­clude Asian De­vel­op­ment Bank and Global En­vi­ron­ment Fund.

“Re­new is in­ter­ested in Ostro En­ergy,” said an­other per­son aware of the de­vel­op­ment, re­quest­ing anonymity.

As part of the con­sol­i­da­tion ex­er­cise un­fold­ing in the In­dian clean en­ergy space, on­go­ing deal ac­tiv­ity, as re­ported by Mint, in­cludes Sub­hash Chan­dra’s Es­sel In­frapro­jects Ltd man­dat­ing In­vestec to find a buyer for its so­lar busi­ness and Fin­land’s state-con­trolled power util­ity For­tum OYJ hir­ing Bar­clays Bank Plc. for a stake sale in its op­er­a­tional so­lar power projects in In­dia.

Also, Cana­dian so­lar en­ergy de­vel­oper SkyPower Ltd has hired Yes Bank Ltd to sell a stake in its so­lar projects and di­ver­si­fied con­glom­er­ate Shapoorji Pal­lonji Group is in stake sale talks for its so­lar project port­fo­lio.

Ex­perts be­lieve that while con­sol­i­da­tion is the way ahead for clean en­ergy in In­dia, not many deals are near­ing fruition. “Ul­ti­mately, it all boils down to val­u­a­tion,” said a Mum­baibased deal­maker aware of Re­new Power’s in­ter­est in Ostro En­ergy’s as­sets. This per­son, too, de­clined to be iden­ti­fied.

In Fe­bru­ary 2015, Ac­tis com­mit­ted $280 mil­lion to cre­ate re­new­able en­ergy plat­form Ostro En­ergy, which helped it bid ag­gres­sively for In­dia’s so­lar power project con­tracts. En­cour­aged by Ostro’s suc­cess, Ac­tis set up a sec­ond green en­ergy plat­form in In­dia, Solen­ergi Power Pvt. Ltd, which was among the suc­cess­ful bid­ders for the Rewa so­lar power project in Mad­hya Pradesh.

A Re­new Power spokesper­son in an emailed re­sponse said, “We would not like to com­ment on mar­ket spec­u­la­tion.”

Re­new Power has around 3.5 gi­gawatts (GW) of op­er­a­tional and un­der-con­struc­tion ca­pac­ity from its own wind and so­lar projects. The firm has set a tar­get of over 11GW of wind and so­lar power ca­pac­ity over next five years.

Spokesper­sons for Ac­tis and Bank of Amer­ica Mer­rill Lynch de­clined to com­ment.

Ac­tis in­vests ex­clu­sively in emerg­ing mar­kets, fo­cus­ing on en­ergy and real es­tate. Of the $7.8 bil­lion de­ployed by Ac­tis, 27% is in en­ergy.

Mar­quee deals in the In­dian re­new­able en­ergy sec­tor in­clude Tata Power Co. Ltd ac­quir­ing the en­tire 1.1GW re­new­able en­ergy port­fo­lio of Wel­spun En­ergy Ltd for $1.4 bil­lion and Hy­der­abad-based Greenko En­er­gies Pvt. Ltd—backed by Sin­ga­pore’s sov­er­eign wealth fund GIC Holdings Pte. and Abu Dhabi In­vest­ment Author­ity—ac­quir­ing SunEdi­son Inc.’s In­dian as­sets for $392 mil­lion last year.

In the largest global clean en­ergy deal till date, a group of in­vestors led by Global In­fra­struc­ture Part­ners last month last month plans to ac­quire Equis En­ergy for $5 bil­lion.

The sale in­cludes the In­dian port­fo­lio of the Sin­ga­pore-based re­new­able en­ergy de­vel­oper com­pris­ing green en­ergy plat­forms En­er­gon and En­er­gon Soleq.

BLOOMBERG

Green en­ergy: The ac­qui­si­tion of Ostro En­ergy by Re­new Power Ven­tures can very well rank among In­dia’s largest re­new­able en­ergy deals.

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