Macquarie, NTPC among those eyeing IL&FS assets

New Delhi: Half-a-dozen investors, including ReNew Power Ventures Pvt. Ltd and Macquarie Infrastructure and Real Assets , are interested in acquiring the ₹5,000- crore clean energy business of debt-laden Infrastructure Leasing and Financial Services (IL&FS), said one person aware of the development.

The transaction for one of India’s largest wind energy platforms will rank among the marque deals in the space, given that IL&FS has operational plants aggregating 873.5 megawatts (MW) and 104MW under construction. This is part of the asset monetization programme being undertaken by IL&FS to reduce its debt burden of ₹91,000 crore.

“There is considerable interest in IL&FS’s wind energy assets with around half-a-dozen firms looking at it,” said the person cited above, requesting anonymity.

The other investors may include India’s largest power generation utility NTPC Ltd, GAIL (India) Pvt. Ltd and Solar Energy Corp. of India Ltd. According to a Bloomberg report on Tuesday, these companies have expressed interest in buying some of the renewable energy assets of IL&FS.

This follows the collapse of a plan to merge Orient Green Power Co. Ltd’s (OGPL’s) wind power business with IL&FS Wind Energy Ltd in 2017. The proposed sale also comes at a time when the wind energy sector has transitioned from a feed-in tariff regime, which ensures a fixed price for wind power producers, to tariff-based competitive auctions. In such a scenario, obtaining finance at the lowest cost has become key.

“The firms have been aggregating capacities through acquisition as part of their strategy,” said another person who didn’t want to be named.

The asset monetization programme of IL&FS includes the sale of its securities business, green energy assets and road and EPC (engineering, procurement and construction) capabilities. All asset sales will be subject to approvals (including from the National Company Law Tribunal). The board has appointed Arpwood Capital Pvt. Ltd and JM Financial Ltd as financial and transaction advisers.

Mint reported on 22 November that Macquarie Infrastructure and Real Assets, Canada’s Brookfield Asset Management, Canada Pension Plan Investment Board (CPPIB) and the Edelweiss Group, among others had been approached for the road assets of IL&FS Transportation Networks (ITNL), a unit of IL&FS.

ReNew Power counts Goldman Sachs, sovereign wealth fund Abu Dhabi Investment Authority, Canadian pension fund CPPIB, Japan’s Jera Co. Inc. and Global Environment Fund among its investors.

IL&FS also has asset management services for wind energy and a business division conducting project development and implementation for the sector. It is also looking to sell solar power projects under development totalling 300MW capacity.

Spokespersons for Macquarie and ReNew Power declined to comment.

Queries emailed to the spokespersons of IL&FS, Arpwood Capital Pvt. Ltd and JM Financial Ltd on Sunday evening remained unanswered at press time.

The stake sale may be executed as a basket, or individually, or in any combination thereof. Serial debt defaults at IL&FS and its subsidiaries that triggered a liquidity squeeze in the non-banking financial sector prompted the government to supersede the board of the infrastructure lender on 1 October.

The news comes amid growing consolidation in India’s emerging green economy. Recently, Greenko Group—one of India’s largest renewable energy platforms—acquired Orange Renewable from Singapore’s AT Capital Group at an enterprise value of under $1 billion and another 385MW of renewable assets from Skeiron Renewable Energy.

Other deals in the works as reported by Mint include Morgan Stanley looking to exit its stake in Continuum Wind Energy; Fotowatio Renewable Ventures is planning to exit its only investment in the Indian solar power space, and Edelweiss Infrastructure Yield Plus Fund is in talks with Engie SA to pick up a significant stake in the French energy firm’s Indian solar business.

Also, the country’s largest electricity trader, PTC India Ltd, plans to exit its wind power business; Actis Llp has agreed to buy Essel Infraprojects Ltd’s solar power projects and Goldman Sachs-backed ReNew Power Ventures Pvt. Ltd acquired Actis’ Ostro Energy Pvt. Ltd.