Japan-based financial services firm ORIX Corp. is set to invest $980 million in India’s Greenko Energy Holdings. ORIX is a major player in the renewable energy business in Japan which includes solar, wind, biomass, power trading and retailing. With 1 GW portfolio, it is also one of the largest corporates in the Japanese solar power generation market.
The deal will peg GIC Holdings Pte. Ltd and Abu Dhabi Investment Authority (ADIA) backed Greenko’s equity and enterprise value at $5.75 billion and $10.2 billion respectively. The two sovereign funds— GIC and ADIA— have so far infused $2.2 billion into Greenko. While GIC and ADIA currently hold 65.8 per cent and 16.5 per cent, respectively, in Greenko, the company’s founders own the remaining 17.7 per cent stake.
Post the transaction, ORIX will have a 17 per cent stake, with GIC and ADIA stake coming down to 56 per cent and 14 per cent respectively. The two founders’ stake will also come down to around 13 per cent. The transaction is expected to be completed by end 2020.
“In addition to acquiring Greenko’s issued shares from the founders’ group, ORIX will integrate its entire wind power generation business in India into Greenko in exchange for Greenko’s new shares,” the Orix statement said. As part of the deal, ORIX’ 873 MW of operating wind assets will be added to Hyderabad-based Greenko’s portfolio and will contribute $100 million to Greenko’s EBITDA in the first year. The addition of these wind projects that NYSE listed Orix had acquired from bankrupt Infrastructure Leasing and Financial Services (IL&FS), will take Greenko’s portfolio near-term capacity to 6.5 GW. ORIX has been a significant shareholder in IL&FS since 1993.
“In addition to an existing total capacity of about 4.4 GW operating renewable portfolio in India—such as solar, wind, and hydro, Greenko recently announced a 1.2 GW hydro asset acquisition and has additional capacity under construction and in development of over 8 GW,” the Orix statement said.
Greenko is building power storage projects with total capacity of 7.2 GW across six states in India as part of its plan to provide on-demand power from wind and solar projects, and is also partnering with state run NTPC Ltd to develop ‘round-the-clock’ power supply. It is also planning to enter the electricity distribution space.
REGlobal’s Views: The deal comes at a time when India’s clean energy space is going through a churn with power procurement curtailment and tariff shopping by discoms. Also, India’s clean energy tariffs have been very low with solar power tariffs hitting a record low of Rs 2.36 per kWh. By investing in Greenko, ORIX has chosen a safer bet to side with a player which has the potential and expertise to tackle the prevailing risks in the Indian renewable energy market.