Adani, KKR, Edelweiss eye Mahindra Susten’s solar assets

Adani, KKR, Edelweiss eye Mahindra Susten’s solar assets – The Adani Group, private equity firm KKR and Edelweiss Infrastructure Yield Plus Fund have separately evinced interest in acquiring 810 megawatts (MW) solar projects of Mahindra Susten, the renewable business arm of Mahindra group, said two people conscious of the event.

The deal, potentially valued at about $530 million, is about to rank among the most important in India’s green energy space. It comes after CLP India emerged because of the final buyer of Mahindra Susten’s 160 MW solar assets that were placed on the block earlier.

“Mahindra Susten has put the projects up purchasable as there’s interest from the likes of Adani, KKR and Edelweiss,” said the primary of the 2 people cited above requesting anonymity.

This interest comes against the backdrop of India unveiling its next-generation power sector reforms that include privatization of electricity distribution companies (discoms) altogether eight union territories and a replacement tariff policy which proposes a cost-reflective tariff, penalty on unjustified power cuts and limiting cross-subsidies.

Mahindra Susten, which builds and sells solar energy projects, has commissioned over 967MW till date and has over 668MW of projects under execution. Spokespersons for Mahindra Susten and Edelweiss declined to comment. An Adani Group spokesperson in an emailed response said, “We don’t discuss market speculations.” Queries emailed to a KKR spokesperson on Monday night remained unanswered whilst one among the world’s strictest lockdown enforced by India to combat the coronavirus pandemic has led to a drop by the country’s power demand, interest in India’s renewable energy space continues.

The renewable energy industry has been facing a decent lending environment, mounting dues from utilities, and record low tariffs. Low solar and wind generation tariffs have made banks wary of lending to renewable energy developers as they’re unsure of the viability of the projects. India is running what it hopes will become the world’s largest clean energy program with the aim of getting 175GW of unpolluted energy capacity by 2022 as a part of its global climate change commitments as It plans to feature 100GW of solar capacity by 2022, including 40GW from rooftop projects.

The developers’ interest also reflects India’s per capita power consumption, which, at about 1149 kilowatt-hour (kWh), is among rock bottom within the world. As compared, the world’s per capita consumption is 3600 kWh. Analysts say that such transactions are excellent news for the world. “It may be a normal practice internationally for developers to sell projects after they need completed construction and de-risked investments. In fact, growing M&A may be a piece of positive news for the world because it brings in new capital from long-term investors and allows developers to recycle their capital to create new projects.

We expect many developers to be trying to find project sales because there are few other exit opportunities and that they got to release funds for brand spanking new developments with French energy giant Total SA as its venture partner, Adani Group, owned by the billionaire Gautam Adani, has been trying to find solar assets. KKR and Edelweiss Infrastructure Yield Plus Fund’s Sekura Energy Ltd have also been active in India’s clean energy space.

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