India: EverSource eyes Azure Power’s solar rooftop portfolio in $112m deal

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In what may rank among the largest solar rooftop deals in India, EverSource Capital plans to buy out the entire 167 MW solar rooftop portfolio of NYSE-listed Azure Power Global for around $112 million, said two people aware of the development.

The sales process for International Finance Corporation (IFC) and Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ) backed one of India’s largest solar rooftop portfolio is being run by KPMG.

The deal activity in India’s green energy space that was subdued on account of the coronavirus pandemic has now gained traction and has also permeated to the solar rooftop space.

This assumes significance given that developers are looking for growth capital in the backdrop of India being home to the world’s largest clean energy programme. The latest case in point being last week’ single-largest foreign clean energy investment announcement of $980 million in India by Japan’s ORIX Corp. for buying a 17% stake in Greenko Energy Holdings.

“EverSource is looking to buy out the entire solar rooftop portfolio of Azure Power Global,” said the first person cited above requesting anonymity.

The electricity generated from these projects is sold to state run firms such as Solar Energy Corporation of India, NTPC, Railways, Delhi Metro Rail Corporation, Hindustan Aeronautics Limited; commercial and industrial consumers such as DLF and Decathlon, and the state-run electricity distribution companies.

“The deal is yet to be concluded,” said a second person cited above who also did not want to be named.

EverSource Capital, an equal joint venture between private equity firm Everstone Capital and global solar project developer Lightsource BP has invested in Radiance Renewables, a distributed renewable energy platform. It develops, owns and operates assets for residential, commercial and industrial customers and has a 1.5 gigawatt (GW) operating portfolio target in four years.

Azure Power has a 7 GW portfolio and German development finance institution Deutsche Investitions- und Entwicklungsgesellschaft (DEG), World Bank’s private-sector development arm IFC and CDPQ as investors.

Queries emailed to a EverSource Capital spokesperson on late Sunday night remained unanswered.

Nathan Judge, head of investor relations, Azure Power, in an emailed response declined comment.

A KPMG spokesperson in an emailed response said, “As a policy, we cannot comment on any company specific information.”

Experts say investors’ interest in India’s green energy sector is likely to continue.

“For one, the electricity demand has more or less caught up with the last year number after the Covid demand shock, and over the long run India’s electricity demand is expected to raise at around 5-6% CAGR (compound annual growth rate). Secondly, we have been seeing a firm commitment towards green energy in India and with an installed solar capacity of less than 40GW wherein the peak demand is around 175GW (and growing), there is enough head room for solar capacity to expand further,” said Rajesh Ivaturi, partner, power and utilities at EY India.

India aims to have 175 GW of clean energy capacity by 2022, including 100GW from solar projects. Of this, 40 GW is to come from solar rooftop projects.

“The roof top solar sector however, hasn’t taken off as expected due to a variety of reasons including lack of innovative business models and sub-optimal push from the discoms. Having said this, the Commercial and Industrial sectors, with their high power tariffs are attractive segments for innovation in the rooftop solar solutions, and we may well see some action around these segments in the short-medium term,” he added.

This is expected to change with Prime Minister Narendra Modi’ recently calling for each state to have at least one ‘solar city’ whose electricity needs would be met entirely through rooftop solar power.

EverSource Capital is a target $ 700 million green infrastructure fund and is looking to invest over $1 billion in renewable energy investments through its Green Growth Equity Fund (GGEF). It has the National Investments and Infrastructure Fund (NIIF) of India and the UK government’ Department for International Development as anchor investors. In July BP Plc announced a $70 million investment in GGEF.

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.

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

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  • 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. 
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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.