Enel India deal enters final stages

Strategic and financial investors JSW Group, Stonepeak Infrastructure Partners and Waaree Energies have submitted binding bids for Enel Group’s renewable energy business in India.

The deal could value the Italy-based group’s wind and solar portfolio at an equity value of $350-400 million, three people familiar with the matter said on condition of anonymity. Adding in total debt, the assets could have an enterprise value of more than $500 to $550 million, people familiar with the matter said.

“Binding bids have arrived. The seller will now obtain exclusivity with one of the potential buyers and proceed,” said the first person. According to him, the transaction may be completed before the end of the financial year in March 2025.

2GW projects under construction

Enel Green Power India’s portfolio includes 760 megawatts (MW) of operating wind and solar assets and a development pipeline of 2 gigawatts (GW). It also has power purchase agreements totaling 190MW. Of the operating capacity, solar power projects include 420MW, while the remaining 340MW comes from wind power projects.

Mint It was first reported that the group planned to sell its India business in December 2023.

Global investment bank HSBC has been helping the group find a buyer. We sent email inquiries to JSW Group, Stonepeak, Waaree and Enel but received no reply.

The country has seen a surge in demand for renewable energy assets. Tuesday, Mint Actis reportedly plans to consider selling its platform BluPine. Other notable assets in the market include Shell’s Sprng Energy, Macquarie’s Stride Climate and Sweden’s EQT-backed O2Power. Siemens Gamesa’s Indian wind turbines are among the foreign assets up for sale, Mint reported earlier this year.

Foreign strategic players exit

“The trend is that many foreign strategic players appear to be exiting India. In the medium term, the growth of renewable energy in India is likely to be led by private equity firms and Indian strategic players,” said Sudip Mahapatra, partner at S&R Associates. Many global renewable energy companies may have found that returns are higher in other markets because India is a more competitive market. Project execution in India also faces challenges. “

In 2020, Enel Green Power India joined forces with Norwegian development finance institution Norfund to jointly finance, build and operate new renewable energy projects in India. Enel Group is also interested in taking over the power distribution business in Puducherry and has submitted a non-binding offer to acquire the Delhi power distribution business of Reliance Infrastructure Ltd.

While solar projects face challenges such as land acquisition and adequate power transmission infrastructure, once early-stage risks are cleared, the projects will command a premium given the country’s growing power demand.

Investment forecasts for the renewable energy sector are strong. In its World Energy Outlook 2023, the International Energy Agency (IEA) predicts that investment in clean energy supply and clean technology manufacturing in India will double by 2030 from US$60 billion in 2022.