On Monday Greenko, backed by Singapore’s GIC and Abu Dhabi Investment Authority (ADIA) announced its single largest acquisition with the purchase of solar and wind portfolio of Delhi-based Orange Renewables for an enterprise value of $1 billion. For the Singapore-based AT Power group promoted by Arvind Tiku, which owns Orange Renewables, the deal marks a successful exit. The acquisition by Greenko was another step towards consolidation in a renewables sector that is becoming increasingly dependent and led by access and ability to raise funding at the best possible rates for the players. The jury is out on whether that is a really good thing.
In this case, on Tuesday, Greenko’s key share holders GIC and ADIA have committed to add $450 million to bankroll the company’s next phase of growth, making this the largest single round of capital investment by a green company in India. After this round, both investors will have cumulatively invested $1.3 billion, with GIC alone putting in $1 billion since 2015 in four rounds. With this, this deal also puts in the shade the earlier largest deal, Re-New power’s acquisition of Ostro Energy back in early April.
The acquisition involves 1 GW of integrated, round-the-clock renewable assets combining hydro, wind and solar with the latest storage technologies.
GIC is the major stakeholder with a 60% stake in the company, the first generation founders Anil Kumar Chalamalasetty and Mahesh Kolli, control 25% and ADIA holds the remaining 15%.
Greenko plans to have three strategic assets (one in the north and two in the south) that are dispersed across the country to create a bundled form of energy supply. Moreover, most of the incremental investments are to go into storage technology.
Greenko is planning to integrate multiple storage technologies like batteries, hydro, with wind, solar and hydro to create an integrated round-the-clock (RTC) renewable energy asset class to meet the discoms’ cost-effective base load energy growth needs and at the same time meet the future Renewable Power Obligations targets.
“We will not pursue standalone renewable assets. Our focus for the next three-five years will be on building integrated round-the clock renewable energy which can compete with base load curves to address the real needs of the discoms when our Indian energy market is transitioning from a deficit market to a real demand-driven market,” said Greenko group CEO Chalamalasetty, to a leading newspaper. No doubt, a new financing pitch in a market where long-term base load demand curves are still evolving.
After losing Reliance’s Mumbai power distribution business to Adani in 2017, the Orange acquisition puts Greenko back into line with its “new strategy”.
“We are working with a large cluster approach in states where we operate. Adding the (Orange) portfolio within those clusters is part of our business model. We did not acquire Orange because it has a gigawatt size portfolio, but because of the assets meeting the Greenko’s operational and financial benchmark returns,” said Mahesh Kolli.