India: PE firms Asia Climate Partners, Olympus to invest $120m in Suzlon

Wind turbine maker Suzlon Energy Ltd is set to raise Rs800 crore (around $120 million) from private equity investors Asia Climate Partners (ACP) and Olympus Capital Asia to create a renewable energy platform, two people aware of the development said.

“Suzlon has been in talks with investors to create an independent platform to invest in and to acquire renewable assets, for the past few months,” one of the two said, requesting anonymity because the talks are private. “The talks with Olympus and ACP are in a very advanced stage and the transaction is expected to close very soon.”

Suzlon is being advised by investment bank Edelweiss Financial Services to help raise funds for the platform, the person added.

The platform will invest in new wind and solar power assets as well as to expand existing ones, said the second person cited above, also requesting anonymity.

“The platform will initially acquire some assets from Suzlon itself and then also look at newer assets to acquire and develop. They plan is to develop around 500 megawatts to 1 gigawatts of assets under the platform,” he said.

A spokesperson for Suzlon denied any fundraising plans. In an email response, Olympus Capital declined to comment. Mails sent to Anand Prakash, managing director of ACP, went unanswered.

Suzlon, in January 2016, won 210 MW of solar projects in Telangana through a competitive bidding process. These include one project of 100 MW, one of 50 MW and four projects of 15 MW each.

The company has in the recent past sold minority stakes in these assets. In October, Canadian Solar Inc. acquired 49% stakes in two Suzlon projects in Telangana. Also in October, Suzlon sold another 49% stake in a 50 MW project to Ostro Energy Pvt. Ltd.

ACP is a joint initiative of the Asian Development Bank, Japanese financial services group ORIX Corp. and Dutch asset management firm Robeco Group N.V. to make private equity investments in the clean energy, resource efficiency and environmental sectors in Asia.

Hong Kong-based ACP has so far made two investments, of which one is in Indian cold chain logistics firm ColdEX.

In February 2016, ColdEX Logistics Pvt. Ltd, which runs a fleet of 850 refrigerated trucks known as reefers, agreed to sell a stake in itself to ACP. The fund also acquired the stake of ColdEx’s existing private equity investor India Equity Partners, which had invested in the company in 2010.

Olympus Capital, founded in 1997, has invested more than $2 billion of equity capital in over 50 portfolio companies throughout Asia, including China, India, Japan, South Korea and South-East Asia, according to the fund’s website.

In India, Olympus has invested in companies such as Aster DM Healthcare, Quatrro Global Services and Vishwa Infrastructure and Services.

India’s renewable energy sector has seen several private equity and infrastructure-focused funds invest in the platform strategy.

In September, Mint reported that asset management firm IDFC Alternatives Ltd will float a platform to hold its renewable energy assets. The company was targeting acquisitions of 250 MW of operating wind, solar and small hydro capacity by the end of 2016 and upwards of 600 MW over the next 18 months.

In October, IDFC Alternatives announced that it is acquiring 24 MW of wind power assets from Jindal Steel & Power Ltd. In the same month it also announced the acquisition of three solar projects aggregating to 45 MW from infrastructure developer Punj Lloyd

Earlier in 2015, global private equity fund Actis Llp committed $230 million to create an Indian renewable energy platform called Ostro Energy. Ostro Energy is the fifth such energy platform that Actis has created globally, following Globeleq Meso America in Central America, Zuma Energia in Mexico, Aela Energia in Chile and Atlantic Renovaveis in Brazil. Since 2002, the firm has invested more than $1.9 billion in 27 energy transactions, across 21 countries.

Other major investors such as Morgan Stanley too have gone down this path. In 2012, Morgan Stanley Infrastructure Partners, an arm of the US investment bank, bought a majority stake in Continuum Wind Energy for around Rs1,200 crore.

Also read:

India: Suzlon to sell 49% stake in SPV to Canada’s AMP Solar

India: Canadian Solar, Unisun buy stakes in Suzlon projects

This article was first published on Livemint