A subsidiary of Singapore-based Sembcorp Industries Ltd has acquired a 60 per cent stake in IDFC Alternatives Ltd-backed renewable energy firm Green Infra Ltd for Singapore $227 million (around Rs.1,060 crore), the company said in a release to the Singapore Stock Exchange.
Sembcorp Utilities acquired the shares from infrastructure-focused private equity fund IDFC Private Equity Fund II and IDFC Private Equity Fund III who were majority shareholders in Green Infra. Green Infra has solar and wind energy assets and this acquisition marks Sembcorp’s entry into India’s renewable energy market.
The investment will be held through Sembcorp Renewables, a wholly-owned unit of Sembcorp Utilities. The transaction will result in IDFC Private Equity Fund II exiting completely and IDFC Private Equity Fund III continuing to hold a 40 per cent stake in the company with a secured path to exit, including through an initial public offering (IPO).
“This acquisition will provide Sembcorp with a platform to grow our renewable energy business. Green Infra’s strong capabilities and experienced team will help accelerate growth in renewable energy not only in India but globally,” said Tang Kin Fei, group president and chief executive officer, Sembcorp.
Sembcorp holds assets under development that will bring its total installed power capacity to 700 megawatts (MW) by 2015. It will include 665MW of wind and 35MW of solar assets in operation and under development, and located in six states in south, west and central India. Green Infra’s portfolio will almost triple Sembcorp’s current renewable energy generation capacity globally to over 1,000MW.
“IDFC Alternatives incubated Green Infra in 2008 to capitalize on India’s renewable energy potential and the firm has come a long way in the last seven years. Today, the renewables sector is at an inflection point and it is the right time to partner with a large multi-national utility like Sembcorp to take the company to the next level of growth,” said Girish Nadkarni, partner at IDFC Alternatives.
Green Infra has an operational portfolio of 516MW which will be increased to 700MW in the next few months. A major part of Green Infra’s electricity output is sold under long-term power purchase pacts with state electricity boards, while the remaining output is sold under long-term contracts with commercial customers. The acquisition cost will be funded through a mixture of internally generated funds and debt financing. Sembcorp plans to complete the transaction by the end of this month.
Apart from IDFC, Green Infra counts the UK government’s investment arm CDC group Plc as one of its investors.
In November 2013, CDC committed $25 million in the firm alongside IDFC Alternatives. Apart from raising equity funding, the firm had raised structured debt of Rs.500 crore in June 2013 from Ajay Piramal Group’s structured investment arm which lends to infrastructure projects.
IDFC Alternatives is a multi-asset class fund manager with assets under management of approximately $3.4 billion. IDFC Alternatives invests in three major asset classes which include private equity, infrastructure and real estate.
