India: Actis, Brookfield eye Mahindra’s EPC, solar assets in deal valued at $500m

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Private equity firm Actis Llp and Brookfield Asset Management Inc., among others, are eyeing Mahindra Susten’s engineering, procurement and construction (EPC) business, besides its under-construction 600MW solar assets, said two people aware of the development, seeking anonymity. The deal is valued around $500 million, they added.

The sale of Mahindra Susten’s assets, and the EPC business is being handled by EY.

This is in addition to the sale of the 600MW operational solar projects, which is being handled by Rothschild. This sale process has seen interest from the likes of National Investment and Infrastructure Fund (NIIF) and the Canada Pension Plan Investment Board (CPPIB).

Mahindra Susten, which builds and sells solar power projects, offers diversified services in the renewable energy and cleantech space. Earlier this year, it had sold around 160MW of solar projects to CLP India. Its portfolio comprises 1,569MW of solar power projects.

“The process run by EY has been underway for more than a month. The under-construction 600MW solar projects may have an enterprise value of around ₹2,400 crore and an equity value of around ₹1,000 crore. Actis is looking at the entire piece, including the EPC business,” said one of the people mentioned above.

A deal’s value can be calculated on the basis of either enterprise value (EV) or its equity value. EV is the value based on market capitalization of a company’s equity, total debt and cash reserves. “The EPC business may command an equity value of around ₹2,500 crore,” said the second person. The development follows Mahindra and Mahindra Ltd’s announcement that it plans to take 10 of its most promising units, including Mahindra Susten, public in the next 5-7 years, as it aims to unlock value in the units by bringing in new investors.

Spokespersons for Mahindra Susten, Brookfield Asset Management Inc. and EY chose not to comment. Queries emailed to an Actis Llp spokesperson on Saturday afternoon remained unanswered.

The Mahindra Susten sale process comes at a time when India’s solar power tariffs hit a record low of ₹1.99 per unit at an auction conducted on Saturday by Gujarat Urja Vikas Nigam Ltd. The rates are expected to decline further. The tariffs had hit ₹2 per unit last month at an auction by state-run Solar Energy Corp. of India Ltd (SECI). Also, India plans to impose a basic customs duty (BCD) of 40% on modules and 25% on cells from 1 April 2022, as reported by Mint earlier.

“We believe such bids are a reflection of lower interest rates coupled with lower project risks on the back of assured power purchase agreements (PPAs) from financially strong discoms or entities. All the winners of the bids have strong and deleveraged balance sheets and access to cheaper funds,” ICICI Securities wrote in a 20 December report.

In fact, India’s green energy deals are getting better valuations to pre-covid levels, as yield-seeking funds and financial investors flush with capital are driving up prices.

This article was first published on livemint.com

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.