Shapoorji Pallonji Group in talks to sell stake in solar portfolio

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The process of consolidation continues in India’s green energy space with diversified conglomerate Shapoorji Pallonji Group in talks to sell a stake in its solar power project portfolio.

The privately held SP Group, which had $5 billion in revenue in 2016, is seeking a financial investor given that financing at the lowest cost holds the key to success. This has been amply made evident in India’s successive solar contract bid rounds.

“The SP Group wants to sell its solar project portfolio and have reached out to investors,” said a person aware of the development, requesting anonymity.

Backed by low financing costs and falling module prices, India’s solar power tariff fell to a record Rs2.44 per kilowatt hour (kWh) in May before firming up to Rs2.65 per kWh in an auction by the Gujarat government last month.

“SP Group has been looking for a financial investor,” said another person aware of the development, who also didn’t want to be named.

Founded in 1865, SP Group is engaged in construction, infrastructure and real estate businesses across the country. Shapoorji Pallonji Infrastructure Capital Co. Ltd (SP Infra) has been active in power, transportation and port sectors. Its firm Shapoorji Pallonji Solar PV Pvt. Ltd works in the renewable energy sector in solar and wind segments.

An SP Infra spokesperson, in an emailed response, confirmed the development. “We are in discussion with several serious investors. The value of the transaction would depend on level of investment and other factors,” the spokesperson said, adding that the size of the portfolio on offer is “under discussion”.

Analysts say that the deal activity in India’s green energy space has picked up and there is a sense of urgency in the equity market activity.

“Financial investors looking for exits and developers looking to raise capital for new projects is creating urgency in equity market activity,” consulting firm Bridge to India wrote in a 3 October note.

Ongoing deal activity 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 to sell a stake in its operational solar power projects in India.

In the largest clean energy deal till date, a group of investors led by Global Infrastructure Partners (GIP) on Wednesday announced their plan of acquiring 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.

Also, Ravi Jhunjhunwala’s LNJ Bhilwara Group sold Bhilwara Green Energy Ltd to the Munjal-family promoted Hero Future Energies Pvt. Ltd.

Mint reported on 20 February about LNJ Bhilwara Group hiring Yes Bank Ltd to run the sale process for its wind energy portfolio.

“This is to inform you that M/s Bhilwara Energy Limited (Promoters of the Company) has sold its entire 100% stake in the Company to Hero Wind Energy Private Limited, a subsidiary of Hero Future Energy Private Limited, renewable energy arm of Hero Group,” Bhilwara Green Energy Ltd told BSE on Wednesday.

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