SoftBank Group Corp. was planning to sell its controlling stake in SB Energy, which has a 7.7 gigawatts (GW) solar power portfolio in India, for an estimated $525 million. SoftBank owns 80% of SB Energy, with the rest held by Bharti Enterprises Ltd. Bank of America and Barclays were handling the sale process that was in the works for around a year.
This comes against the backdrop of several preconditions, also referred to as condition precedents (CPs), placed by CPPIB, such as meeting certain project commissioning deadlines, securing new businesses, bond issuance, and SoftBank bearing any future liquidated damages liability for acquiring this stake as reported by Mint earlier. Each CP had a monetary component attached to it.
“The deal has been called off and an internal announcement to this effect has been made,” said one of the two people cited above, requesting anonymity.
SoftBank has invested more than $800 million in the business in the past five years. The stake sale efforts followed SB Energy dropping its plan in July 2020 to raise $600 million through a dollar bond. Mint reported on 6 July 2020 about SoftBank’s plan to sell its entire stake in a shift from its earlier plan to find a significant minority investor, and its separate talks with CPPIB, Canada’s Brookfield Asset Management Inc., and Abu Dhabi’s sovereign wealth fund Mubadala Investment Co. for the sale.
A CPPIB spokesperson in an emailed response said, “We continue to look for opportunities for new investments in India, including in the renewables sector, as part of our Sustainable Energy Group strategy. Since the start of 2021, we have announced an increased commitment in toll roads via IndInfravit, a new JV with RMZ in real estate and a private equity co-investment in animal health. CPP Investments is a major investor in India with C$12 billion invested to date and the country is core to our global, long-term investment strategy.”
Spokespersons for Bharti Enterprise, Bank of America and Barclays Bank India declined comment.
This also comes at a time of SoftBank Group Corp. registering record profits.
Spokespersons for SoftBank Investment Advisers and SoftBank Group did not immediately respond to Mint’s queries emailed on Thursday afternoon.
Queries emailed to SB Energy’s chief executive officer Raman Nanda, SB Energy’s country head and president India Rohit Modi and SoftBank Group spokesperson on 13 May also remained unanswered.
The valuation of SB Energy was lower than the one expected by the sector.
The Economic Times reported on 30 December that currently 75% of SoftBank’s stake is being transferred to CPPIB and if the conditions precedent are not met, SoftBank will transfer a 5% stake that it is temporarily holding as security for free to CPPIB.
The Canadian pension fund manager has been investing in real estate, infrastructure, public and private equities, funds and co-investments and credit in India. Its global net assets totalled C$475.7 billion as of 31 December.
There are a number of clean energy deals in play as reported by Mint earlier. A case in point being Macquarie Infrastructure and Real Assets (MIRA), one of the largest foreign infrastructure investors in India, planning to sell around 450MW of solar power projects for an estimated equity value of around $300 million.
India is running the world’s largest clean energy programme to achieve 175 gigawatts (GW) of renewable capacity, including 100GW of solar power by 2022. Of the solar capacity, 40 GW is expected to come from rooftop solar projects.
According to the Central Electricity Authority, by 2030, the country’s power requirement would be 817GW, more than half of which would be clean energy, and 280GW would be from solar energy alone. To achieve the target of 280GW, around 25GW of solar energy capacity is needed to be installed every year till 2030.