The Hero Group is close to acquiring almost the entire wind energy portfolio of the LNJ Bhilwara Group, helping the buyer emerge as one of the biggest players in the rapidly growing sector that has seen large M&A deals in recent months.
The acquisition, on the verge of being finalised, follows several deals since last year in the sector, involving the Tatas, Sun Edison, CLP Holdings and other companies. Several Indian and foreign groups including the Adanis and Softbank are also considering opportunities in the sector, which has expanded rapidly as companies have bid aggressively with razor-thin margins to grab auctioned projects by offering rockbottom tariffs.
Hero Future Energies (HFE) will acquire the portfolio of Bhilwara Energy Ltd (BEL) in an allcash deal, sources close to the development said. The size of deal is not yet known as some details remain to be worked out. It is acquiring 83.5 MW of wind projects out of BEL’s total of 103.5 MW across two states – a 49.5 MW project in Satara, a 14 MW one in Bhendewade, both Maharashtra, and a 20 MW project in Jaisalmer, Rajasthan.
“The remaining 20 MW will stay with BEL because of some internal issues,” one of the sources said. This will take the Hero Group’s total portfolio to around 1200 MW, half of it in wind and the rest in solar energy, making it one of the largest renewable energy companies in the country. However, it is still well behind ReNew Power, whose portfolio crossed the milestone of 2000 MW in March this year and Tata Power Renewable Energy, which following its acquisition of Welspun Energy’s renewable assets of 1140 MW in June 2016, now has a 2300 MW solar and wind portfolio. But HFE has set itself a publicly disclosed target of achieving 3500 MW by 2020, in which acquisitions are expected to play a vital part.
BEL’s wind assets have been on the block since February, with the company preferring to concentrate on its large hydro-electric projects in Himachal Pradesh, Arunachal Pradesh and Nepal. While its Rajasthan wind project is a group captive one, the two in Maharashtra supply power to state discoms under longterm 25-year power purchase agreements (PPAs). “The projects are barely four or five years old,” said the source. “There are still 20 or more years of the PPA to go.”
The past 18 months have seen a number of acquisitions in this sector with Tata Power’s buyout of Welspun Energy’s renewable portfolio for Rs 9,249 crore in June 2016 being the biggest. Another major acquisition was that of Greenko Energies taking over the Indian assets of 500 MW of the bankrupt US-based SunEdison, once the largest renewable energy company in the world, for $392 million (Rs 2,607 crore) in October 2016.
In June this year, CLP India, a wholly owned subsidiary of Hong Kong-based CLP Holdings, bought a 49% stake in Suzlon’s solar subsidiary, SE Solar, for Rs 73.5 crore. In July, Vector Green Energy, the renewable energy arm of IDFC Alternatives, acquired 190 MW of solar assets across seven Indian states from US-based First Solar for an undisclosed amount.
Currently, a number of companies, global and Indian, including HFE and the Adani Group, are vying to acquire the Indian renewable energy assets of Singapore-based Equis Energy, which has put its entire renewable energy portfolio across several Asian countries up for sale. Again, private equity fund Actis Llp has been seeking to divest its stake in Ostro Energy’s renewable portfolio for a number of months. Read more