Hyderabad-based internet infrastructure company Nettlinx Ltd said it is acquiring a 51% stake in Sri Venkateswara Green Power Projects, marking its entry into the growing renewable energy sector.
The target firm is developing a Rs 192 crore renewable power project in Telangana state.
As part of the transaction, Nettlinx will invest Rs 57.6 crore and Sri Venkateswara Green Power Projects will invest Rs 28.22 crore for the development of the project, Nettlinx said in a statement.
The remaining amount will be funded through term loans and working capital borrowings, it said.
The project, which will have a capacity of 12 megawatt (MW), is expected to be completed within 18 months. It is expected to generate revenues of Rs 55 crore per year.
“The investment and acquisition are strategic in nature, considering the company’s decision to diversify into sunrise business segments," said Manohar Loka Reddy, chairman, Nettlinx.
K Venkateswara Reddy, managing director of Sri Venkateswara Green Power Projects, said the partnership will help build a robust ecosystem to execute the project faster and manage efficiently. The companies will continue to operate as independent entities, he said.
India’s renewable energy sector has seen a lot of activity over the last couple of years after the government set ambitious capacity-addition targets. The government aims to achieve 175 gigawatt of renewable power generation capacity by 2022.
This includes 100 gigawatt of solar and 60 gigawatt of wind power capacity. India’s renewable energy capacity is currently around 44 gigawatt.
Renewable energy has been a preferred asset class for developers and investors because of falling solar panel prices and improving wind technology yields, according to Vikas Dawra, senior president and global head, investment banking, Yes Securities.
Some of the world’s biggest pension funds, including Canada Pension Plan Investment Board and Caisse de dépôt et placement du Québec, are also scouting for deals in India’s solar power sector.
Nettlinx, which started operations in 1999, offers managed network services to enterprises across Telangana and Andhra Pradesh. It offers a range of network solutions like internet, network management services, data centre and colocation services and enterprise mailing solutions.
Shares of Nettlinx closed down 1.52% at Rs 107.15 a piece on BSE on Wednesday in a weak Mumbai market.