Aditya Birla Group seeks investor for renewable energy JV with Abraaj

Kumar Mangalam Birla-controlled Aditya Birla Group, which tied up with private equity house Abraaj Group in 2015 for its renewable energy business, is said to be seeking a new investor for the business, two people aware of the development said.

Aditya Birla Renewables Ltd is a joint venture between the Birla Group and Abraaj, with Birla holding a 51% stake and Gulf-based Abraaj holding the remaining 49% stake.

“The solar power platform will bid for projects tendered at national and state auctions, with the intent to develop and operate utility-scale solar power plants that can provide clean and cost-effective electricity to national grids across several key states in India,” Aditya Birla Group said in statement in 2015.

The Aditya Birla group is now in talks with overseas investors to pick up a stake in the solar platform, said one of the people cited above.

“They want to grow the business and they are seeking to bring on board a new deep-pocketed investor. They are looking for a large pension or sovereign wealth fund kind of investor. They are looking at some investors from the Gulf region,” he said, requesting anonymity as the talks are private.

According to the second person cited above, the new investor might pick up part or the whole stake currently owned by Abraaj in the firm. “Abraaj Group has been facing challenges since the start of the year as several of its investors raised concerns of misuse of funds and commissioned an investigation. The ongoing troubles at Abraaj raise concern about its ability to focus on this business and thus a new investor that Birla gets on board might be asked to buy out part or whole of Abraaj’s stake,” he said. He too requested anonymity.

A spokesperson for the Aditya Birla Group said that they do not comment on market speculations.

Emails sent to Abraaj Group did not elicit any response.

On 4 June, Bloomberg reported that Abraaj, which has been facing allegations of misused funds, will meet shareholders and lenders on to discuss the restructuring of the Dubai-based asset manager, updating stakeholders on the talks with potential acquirers of its asset-management business.

Cerberus Capital Management Lp, a special situations investor, has bid $125 million to acquire Abraaj’s private equity business, The Wall Street Journal reported on 5 June. The Indian government’s ambitious target to generate 175 gigawatts (GW) of renewable energy power by 2022 has encouraged many large investors to invest in the sector. Earlier this year, Canada Pension Plan Investment Board (CPPIB) invested $247 million in ReNew Power Ltd, the largest renewable energy company in India to help acquire Ostro Energy, which owned 1.1GW of renewable assets.

On 5 June, Mint reported that sovereign wealth funds GIC Holdings Pte Ltd and Abu Dhabi Investment Authority will invest a combined $450 million (around ₹3,000 crore) in Greenko Energy Holdings in one of the largest funding rounds in an Indian renewable energy company.

This article was first published on livemint.com