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Mumbai: Investors are queuing up for a piece of BluPine Energy, a renewable power platform incorporated in India by London-based global private equity firm Actis Capital in mid-2021, according to four people aware of the matter who spoke on condition of anonymity.
Mumbai: Investors are queuing up for a piece of BluPine Energy, a renewable power platform incorporated in India by London-based global private equity firm Actis Capital in mid-2021, according to four people aware of the matter who spoke on condition of anonymity.
The development comes in the backdrop of heightened investor appetite for clean energy assets in India, with several deals struck and more in the pipeline.
“Investment bankers have approached Actis with several offers and a formal process is likely to start early next year," said a person with knowledge of the development.
The discussions are in early stages and Actis is yet to formally appoint bankers for the transaction, which could take up to a year for culmination, said the person cited above, who is a senior executive directly aware of Actis’s plans.
Also read | Macquarie, JSW Group, Actis line up to buy O2 Power in $1-billion deal
“The asset has done well for the private equity investor and is likely to fetch around a billion dollars as and when it happens," the executive said.
He added that the investment firm is exploring the divestment option after several bankers pitched the idea of fetching an attractive valuation considering investor interest in other deals this year.
Meanwhile, in an email response to Mint’s queries, Actis denied that it has put BluPine on the block. “We would like to state that the information regarding Actis exploring divestment from BluPine Energy is misleading and incorrect," a spokesperson for the investment firm said.
The PE firm, which invests in sustainable infrastructure and real estate, has $14.1 billion of assets under management across 60 countries.
What is BluPine Energy
In 2021, Actis set up BluPine with an investment of $800 million from its Energy Fund 5 with a target of achieving over 4 GW of renewable energy portfolio in India by 2028. Currently, BluPine has about 2.6 gigawatts (GW) of solar and wind energy assets in India, of which 1 GW of solar assets is operational.
The operational assets include the 404 megawatts (MW) of solar assets acquired by the company from Atha Group in November 2022. BluPine also acquired 369 MW of operational solar power assets from the Acme Group this March for an undisclosed sum.
Also read | Actis’ BluPine Energy buys Atha Group’s 404 MW solar power assets
The company, which is headed by chief executive officer Neerav Nanavaty and chief financial officer Sanjeev Bhatia, has solar assets in Maharashtra, Rajasthan, Tamil Nadu, Karnataka, Telangana, Madhya Pradesh, Uttarakhand and Punjab. It is also developing wind power assets in Gujarat and Karnataka, and a battery storage system in Maharashtra.
The second person cited above said, “The Ebitda multiples on large energy platforms are higher than those on smaller assets. As such, acquiring smaller operational assets gives them a valuation arbitrage."
Typically, renewable energy deals in the private market are valued at nine to 10 times forward 12-month Ebitda, he said. Ebitda stands for earnings before interest, tax, depreciation and amortization.
Clean energy action
To be sure, mergers and acquisitions in the renewable energy space in India have picked up pace in recent months as investors look to make a bet on New Delhi’s clean energy push.
In August, Asian Development Bank (ADB), World Bank’s IFC and Germany-headquartered DEG invested an aggregate $275 million in Hyderabad-based green energy platform Fourth Partner Energy for an undisclosed equity stake, according to a statement from the latter.
Last week, key investors including Canada Pension Plan Investment Board, UAE-based Masdar, chairman Sumant Sinha and a unit of the Abu Dhabi Investment Authority offered to take US-listed ReNew Energy Global private, as per regulatory filings in the US.
Also read | Actis to buy 400MW solar assets from Atha Group for ₹2,100 cr
The investors were offering an 11.5% premium to the company’s share price, valuing India’s second-largest renewable energy platform at $2.8 billion, Reuters reported.
Last September, Delhi-based renewable energy firm Juniper Green Energy announced a $350 million investment from Singapore's AT Capital Group and The Netherlands' Vitol.
Other notable assets on the market include Shell’s Sprng Energy, Macquarie’s Stride Climate and Sweden’s EQT-backed O2Power.
Interestingly, Actis itself is reported to be in a race to acquire Stride Climate, giving an insight into the market’s frenzy, where investors are weighing a high-return early exit on one hand, with long-term prospects on the other. While the long-term prospects of the sector are bright, project execution in India is a key challenge that many companies have stumbled upon.
Also read | Actis launches gas-based power generation business for Southeast Asia
India’s renewable energy capacity reached 203 GW as of October, the government said Friday. This compares to the country’s total electricity generation capacity of 453 GW.
Solar power accounts for a lion’s share of India's clean energy mix at 92 GW, followed by 52 GW of wind energy and 47 GW of hydro power, as per government data. Biopower, including biomass and biogas energy, adds another 11 GW to the renewable energy mix.
New Delhi has stated a target of achieving 500 GW of non-fossil-fuel based electricity by 2030, achieving 50% of cumulative electric power capacity from these renewable sources.
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