How KKR is betting on green future in India

MUMBAI: KKR is doubling down on the India renewables story and is in advanced talks to buy the solar portfolio of Shapoorji Pallonji Group for Rs 1,500-1,750 crore ($230-250 million). It is also in talks to buy Hyderabad-based Mytrah Energy for Rs 5,250 crore ($750 million), said people aware of the negotiations.KKR alone is looking at deploying at least half of the amount involved as equity commitment in Mytrah while some existing lenders like Dutch pension fund manager APG Asset Management may join as co-investors by converting a part of their exposure and rolling over the rest.The deal with SP Group is expected to be stitched up in the coming weeks, while due diligence is underway for Mytrah.KKR to Control 2-gw portfolioThe transactions — if successful — will give KKR control over a 2-gw clean energy portfolio, making it a sizeable player in the space.KKR began to focus on Asia’s infrastructure sector with a series of hires beginning about a year ago, and launched its fundraising in 2019. About 50% of its maiden fund has just been raised. It made its first investment in May via a $400-million deal to take control of India Grid Trust (IndiGrid), the infrastructure investment trust of Sterlite Power Transmission.Both SP Group and Mytrah are leveraged, and are facing liquidity challenges. 72269234 Mytrah’s problems have been compounded also because it is caught in the political crossfire following the Jaganmohan Reddy government’s decision to review renewable energy tariffs in Andhra Pradesh, which triggered a ratings downgrade for the company’s projects. Mytrah has around Rs 11,000 crore of debt at various entities. The new investors plan to get the loans refinanced.In September 2017, Mytrah raised Rs 1,800 crore ($277 million) from the Piramal Group through non-convertible debentures. It used the funds to provide an exit to some investors — IDFC Alternatives, AION Capital, Merrill Lynch and Goldman Sachs — besides meeting growth capital needs.Mytrah’s 1.6 gw operating portfolio of wind solar parks are spread across Rajasthan, Gujarat, Madhya Pradesh, Maharashtra, Andhra Pradesh, Telangana, Karnataka, Punjab and Tamil Nadu. SP Group’s footprint is focused around Maharashtra and Tamil Nadu, and its plants fetch average tariffs of Rs 4-7 per unit.Earlier this year, Sprng Energy, a renewable energy platform of Actis LLP, acquired 194 mw of solar assets from Shapoorji Pallonji Solar Holdings for an enterprise value of $200 million. Now the residual 260 mw is also up for grabs.SP Group watchers said the divestments are part of a longterm strategy, launched in 2018, to deploy more capital and equity to develop greenfield assets. But matters have gone downhill since then, they said, with the group seeking an extension to repay an inter-company loan of Rs 2,341 crore (as of September 2019) to the recently listed EPC arm — Sterling and Wilson Solar.“Shapoorji Pallonji Group is in discussions with various investors; however, as a group policy we cannot disclose further details,” the SP Group spokesperson told ET. KKR declined to comment. Mails sent to Mytrah did not elicit a response till press time Wednesday, while APG refused to comment on individual investments.

from Economic Times https://ift.tt/34qNVd7