IDFC Alternatives buys IL&FS’s Madhya Pradesh solar project

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IDFC Alternatives, the private equity arm of IDFC Ltd, has bought a 40 megawatt (MW) solar power project in Madhya Pradesh operated by IL&FS Energy, two people aware of the matter said. Vector Green Energy, a company formed by IDFC Alternatives’ India Infrastructure Fund II to house its renewable energy investments, made the acquisition, the people mentioned above said on condition of anonymity. Aditya Aggarwal, partner, IDFC Alternatives, confirmed the transaction.

“Consistent with our stated strategy of aggregating operating renewable assets, we are continuing to target high-quality cash generating and operating renewable assets, with the aim of expanding to 500-600 MW of operating capacity by the end of 2018,” Aggarwal said. The deal size could not be ascertained.

The project, named Malwa Solar Power Generation Ltd, was awarded to IL&FS Energy Development Co. Ltd by Solar Energy Corp. of India as part of the Jawaharlal Nehru National Solar Mission (JNNSM) and was commissioned in 2015.

“After having created the core platform, we are now focussing on diversifying our portfolio to include some C&I (commercial and industrial) and rooftop exposure in the coming days,” Aggarwal added.

In July last year, IDFC Alternatives acquired seven operating assets in Andhra Pradesh and Telangana from First Solar Power India Pvt. Ltd for an estimated Rs1,920 crore ($300 million). All debt raised for the acquisition was refinanced earlier this year. The seven projects have long-term power purchase agreements with state utilities. Again in October 2016, IDFC Alternatives’ India Infrastructure fund I acquired three solar projects in Punjab and Rajasthan from Punj Lloyd. In September 2016, the PE fund established Vector Green Energy as the operating and holding company for its control investments in the renewable energy.

Currently, Vector Green owns six assets and has agreed to acquire an additional five assets aggregating to 200MW. Vector Green is managed by an in-house professional team. The Vector Green website says it is looking to acquire and develop renewable projects to grow the platform to 1GW and beyond. The PE fund expects to invest an additional $150-200 million of equity capital into the platform and also has additional commitments from investors. IDFC Alternatives manages nine India dedicated funds across three asset classes: Private equity, infrastructure and real estate.

The transaction is the latest acquisition by IDFC Alternatives in the solar energy space and indicates growing consolidation in the renewable space where a number of assets have changed hands and several are on the block.

Mint reported in February that Greenko Group and Hero Future Energies Pvt. Ltd are separately looking to acquire Subhash Chandra’s Essel Infraprojects’ solar business. Essel Infraprojects has 685 megawatts (MW) of solar capacity, of which 165MW is operational. An additional 520MW of solar projects are under construction at various stages in Uttar Pradesh, Odisha and Karnataka. Mint reported in December that ReNew Power Ventures Pvt. Ltd was close to acquiring Ostro Energy Pvt. Ltd, the company that holds the renewable energy assets of buyout firm Actis Capital, for an enterprise value of Rs10,000 crore.

Among the recent large transactions in the renewable energy space is Tata Power’s acquisition of the entire 1.1GW renewable energy portfolio of Welspun Energy Ltd for $1.4 billion in June 2016. In November 2016, Hyderabad-based Greenko, backed by Singapore’s GIC and Abu Dhabi Investment Authority (ADIA), acquired Sun Edison’s Indian assets in October at an enterprise value of $392 million (Rs2,607 crore).

The deal involved an equity investment of $42 million (Rs279 crore) and required Greenko to assume project-level debt of $350 million.

 

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