NYSE-listed Azure Power, Macquarie, KKRand ReNew Power are among players weighing a bid for private equity firm Actis-owned renewable energy company, SprngEnergy, according to multiple people aware of the matter.
A successful bidder would have to cough up $1 billion or more to buy Actis’s stake in Sprng Energy, according to sources. The company also has $1 billion of debt, taking the enterprise value of the transaction to over $2 billion.
While Azure Power and ReNew Power have held financing discussions with banks to raise money for a bid, Macquarie and KKRhave approached due diligence advisors ahead of a Christmas deadline for submission of non-binding offers for the company, these people said.
The four possible contenders could be joined by two or three more competitors that could include Canada-based pension funds, these people said.
Final bids for Sprng Energy will need to be submitted by March. Bank of America Merrill Lynch is the financial advisor to Actis on the sale of the company. A spokesperson for Actis declined to comment. Azure Power, ReNew Power, KKR and Macquarie did not comment.
“This is probably the largest cheque that one could have to write for a buyout of a renewable energy company in India so far,” an executive aware of the matter said.
Potential contenders have also been speaking to local banks for refinancing a portion of the company’s existing debt if they were to succeed in the bid. The company has plans to develop a portfolio of 9 GW of renewable energy, which predominantly comprises solar power generation, according to sources briefed on the matter. It has an operational power generation capacity of around 2 GW.
Actis had invested $450 million to set up Sprng Energy in March 2017 with a plan to develop an India-focused renewable energy portfolio of assets. The UK-based private equity investor recently closed a $4.7 billion fund to invest in infrastructure.
It has demonstrated a successful track record of investments in the renewable energy space in India. Prior to Sprng Energy, it had set up Ostro Energy, another renewable energy company, which it eventually sold to ReNew Power for an enterprise value of around $1.5 billion.
Deals in the renewable energy space have been sporadic over the past year with fewer transactions having taken place compared to the deal frenzy witnessed earlier. However, two significant investments included one by Thailand’s PTT Energy, which bought a 41% stake in Avaada Energy for $453 million in July, and Adani’spurchase of Softbank and Bharti’srenewable energy JV, SB Energy, for an enterprise value of $3.5 billion in May.
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