India: GIC-backed Greenko in talks to acquire Gati Infrastructure’s Sikkim project

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Greenko Group is exploring the acquisition of Gati Infrastructure Pvt. Ltd’s (GIPL) 110 megawatt (MW) Chuzachen hydro-electric project in east Sikkim, two people aware of the development said.

Hyderabad-based Greenko, backed by Singapore’s sovereign wealth fund GIC Holdings Pte and Abu Dhabi Investment Authority, wants to acquire the privately owned project in India’s north east region as part of its strategy of becoming an integrated energy company. It has 21 operational hydropower projects with a total installed capacity of 379.8 MW.

“Five-six years ago, there were many players in the hydro sector. Now, most of them have pulled out of it. So, there are opportunities both in brownfield and operating assets with Greenko evaluating Gati’s Sikkim hydropower project,” said one of the two people cited above, requesting anonymity.

Hydropower projects come with their own set of problems. Their construction requires specialized technology and design. They also have to deal with geological surprises such as earthquakes, floods and landslides.

“Greenko has been present in the hydropower sector. From there, they got into wind and solar, and now, they are also looking at the transmission and distribution assets. The thought process is to become an integrated utility. They are looking at Gati’s project,” said the second person cited above, who also didn’t want to be named.

Mint reported on 4 October about Greenko Group planning a $750 million equity investment for buying power transmission and distribution assets for diversification. The firm is in talks to acquire several electricity transmission, distribution and hydropower projects.

GE Energy Financial Services India has invested Rs257 crore in this project by Gati Ltd, a distribution and supply chain solution provider.

GIPL is a special purpose vehicle (SPV) and its holding company is Amrit Jal Ventures Pvt. Ltd. (AJVPL).

The run of the river Chuzachen project which uses water flow from the Rangpo and Rongli rivers was built at a cost of Rs1,188 crore, according to a 30 July 2013 GE statement.

While an external spokesperson for GE Energy Financial Services in an emailed response said, “We do not have any additional information to share at this point in time,” queries emailed to Mahendra Agarwal, founder and chief executive officer of Gati Ltd, remained unanswered.

Queries emailed to spokespersons for Greenko Group and Gati Ltd also remained unanswered.

In 2016, Greenko acquired SunEdison’s Indian assets at an enterprise value of $392 million. It currently has over 2.7 gigawatts (GW) of operating capacity with plans to achieve 3GW capacity by December. The firm plans to reach 5GW capacity by 2019.

Experts say that large clean energy firms are looking at an integrated energy play given the disruptions in the Indian power sector.

“Large renewable companies are keen on mid-sized hydro projects because longer asset life and a predictable output complements well with other renewable sources, enhancing the overall portfolio value,” said Kameswara Rao, leader of the energy, utilities and mining practice at PwC India.

“Erstwhile hydro power developers have suffered from disallowed capital costs on regulated PPAs (power purchase agreements) or from low margin on merchant sales. A consumer in Delhi, for example, sourcing from a hydro project in Sikkim, could incur as much as 74% of its affordable tariff on transmission and open access charges. So, firms acquiring these assets will be taking a long-term view on energy prices,” Rao added.

Also read:

India: GIC-backed Greenko plans $750m equity investment to buy power T&D assets

India: Greenko in talks with bankers to raise $456m via bond offering

This story was first published on Livemint

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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).

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  • 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. 
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