IL&FS Energy Development Company, involved in setting up of solar parks in public private partnership (PPP) with state governments, is looking at acquiring close to 150 MW of solar assets, and it has initially zeroed in on 9 projects to help it get there. The decision to buy solar assets comes close on the heels of the company selling its 40 MW solar asset in MP to IDFC Alternatives. The transaction was confirmed by the company to FE.
People close to the development told FE that the company is in the process of conducting due diligence of the 9 targeted assets. Details of the specific projects were not available due to confidentiality agreements, but some of the projects in the market that are up for sale include First Solar’s 50 MW capacity, Ganesh Jewellery’s 20 MW, Waree Energy’s 40 MW, Jackson Power’s 30 MW, Equis Solar’s 260 MW and ACME’s 250 MW, sources said. This could not be independently verified.
When contacted by FE, the company refused to comment on the subject.
A banker, on condition of anonymity, said, “IL&FS always looks for value creation either through their own asset creation or by purchasing assets at discounted rates. Typically, they look at assets at a discount of 15-20% to the market, to meet their valuation expectations.”
Solar valuations have been recently under stress due to a fall in solar tariffs, which have dropped to Rs 2.44/kWh from a high of Rs 17/kWh in 2010-11, due to aggressive bidding by builders and a consistent drop in solar panel prices. “We will see a lot of consolidation within the sector, where bigger players will take over stressed assets at discounted valuations. Also, the valuations will see pressure, though recent biddings are still crowded and aggressive,” said Arvind Tembhurne, an investment banker.
IL&FS Energy has till date invested more than `7,000 crore in renewable energy, across wind and solar. It has close to 900 MW of operational wind projects spread across several high wind states of India.