India Grid Trust (IndiGrid), an infrastructure investment trust controlled by private equity firm KKR, has struck a deal with US-listed green energy firm ReNew Power to buy a 300MW solar power project in Rajasthan.
IndiGrid will acquire the asset, operated by ReNew Solar Urja Pvt Ltd, at an enterprise valuation of Rs 1,550 crore. The valuation, including net working capital and cash, will be about Rs 1,650 crore ($199 million).
The deal will have an additional earn-out component of around $8 million, which ReNew will receive on account of change-in-law proceeds, after it realises the first payment, the company said in a statement.
ReNew, which was founded by Sumant Sinha and is majority owned by Canada Pension Plan Investment Board (CPPIB), said that it will transfer the outstanding debt of the asset to IndiGrid and that the transfer will result in a cash inflow of nearly $82 million.
CPPIB became the majority owner of Renew Energy Global Plc in March last year after it acquired $268.6 million shares from Goldman Sachs, taking its stake in the Indian renewable energy company to 51.6%.
As of the end of September last year, ReNew had a total portfolio of 13.8GW. Apart from CPPIB, ReNew is backed by Abu Dhabi Investment Authority, the Global Environment Fund and Japan’s JERA.
ReNew was listed on the Nasdaq stock exchange in 2021 at a $4.5 billion valuation via a special purpose acquisition company. It has a market cap of $2.81 billion currently.
Meanwhile, this is the second major acquisition by IndiGrid over the past few months. IndiGrid had acquired Virescent Renewable Energy Trust, an InvIT also owned by KKR, last year at an enterprise value of Rs 4,000 crore.
IndiGrid said it will fund the latest acquisition through a combination of equity, internal accruals, and debt. It said that, during the first nine months of this fiscal year, it has completed equity fund raising of Rs 1,050 crore through preferential allotment and institutional placement. This gives it growth headroom of Rs 6,000-7,000 crore at a leverage threshold of 70%, IndiGrid said.
IndiGrid also said the deal with ReNew will increase its portfolio of operating solar assets to more than 1 GW peak capacity the total assets under management will rise to Rs 28,500 crore.
The Jaisalmer, Rajasthan-based 300MW solar project was commissioned in December 2021 and has a 25-year power purchase agreement with Solar Energy Corp of India at a fixed tariff of Rs 2.71 per unit. The Rajasthan project would be the largest capacity project located at a single site for IndiGrid, it said.
“India is witnessing a steep increase in its power demand to fuel its rapid economic growth. In view of India’s focus on energy transition, we are confident of the strategic value of renewable energy projects in the coming decades,” said Harsh Shah, CEO, IndiGrid.
IndiGrid was set up in 2016 by Sterlite Power Transmission Ltd. It was listed on the Indian stock exchanges in 2017. KKR first invested in IndiGrid in 2019 as part of a multi-layered transaction, which also saw the participation of Singapore sovereign wealth fund GIC. KKR became IndiGrid's sponsor in 2020.
