The promoters of Cleantech Solar Energy aim to sell their controlling stake in the green energy firm backed by Royal Dutch Shell, said two people aware of the development.
Standard Chartered has been hired to find a buyer for the potential transaction that could rank among the largest so far in India’s solar rooftop space.
Cleantech Solar has a 500-megawatt (MW) portfolio under various stages of development across India, Indonesia, Cambodia, Malaysia, Thailand, Vietnam and Singapore.
In January 2019, Shell Eastern Petroleum (Pte) Ltd acquired a 49% stake in Singapore-headquartered Cleantech Solar. The remaining 51% stake is held by the founders’ holding company, which has promoters including chairman Raju Shukla as stakeholders.
“The founders’ holding company led by chairman Raju Shukla, which has a 51% stake in Cleantech Solar Energy, is looking to exit. Shell is likely to continue as a partner,” said one of the two people mentioned above requesting anonymity.
The potential deal comes against the backdrop of growing consolidation in the commercial and industrial (C&I) segment, given the lower regulatory risks over green energy contracts and enforcement.
A case in point is Singaporean conglomerate Keppel Corp. being among the suitors for Warburg Pincus LLC’s majority stake in rooftop solar power producer CleanMax Enviro Energy Solutions Pvt. Ltd as reported by Mint earlier. Also, Norway’s state-owned Norfund and TPG Capital’s The Rise Fund announced their $100 million and $25 million investment, respectively, in Hyderabad-based Fourth Partner Energy on Wednesday.
Raju Shukla did not comment. A Standard Chartered Bank spokesperson also did not comment.
Shell had set up its new energies division in 2016. The Anglo-Dutch company runs a liquefied natural gas terminal at Hazira on India’s west coast and is among the few foreign oil firms to have a fuel retail licence in the country.
The investors’ interest also stems from India’s growing demand for electricity and the focus on green energy sources. India aims to achieve 175 gigawatts (GW) of renewable capacity, including 100GW of solar power, by 2022. India’s power requirement would touch 817GW by 2030, more than half of which would be clean energy, according to the Central Electricity Authority.
Given the growing focus of ESG funds, India’s distributed renewable energy generation space is attracting strong investor interest as the market has few developers with large portfolios. C&I projects are generally insulated from risks such as power procurement curtailment and tariff shopping by state-owned distribution companies. They supply electricity to third-party and captive consumers who buy power from them, instead of depending on an expensive grid.
India’s C&I segment has been attracting global energy majors and investors. Firms such as Malaysia’s state-run oil and gas firm Petroliam Nasional Bhd’s Amplus Energy Solutions and Netherlands Development Finance Co.-backed Avaada Energy Pvt. Ltd are in this space. Actis plans to invest $850 million to build two green energy platforms, one of which will be focused on the segment.
This article was first published on livemint.com.