Stonepeak, I Squared, Actis and four other companies bid for O2 Power in $1 billion deal

The seven bidders include alternative investment firm Stonepeak, New York-based private equity firm I Squared Capital, JSW Neo Energy of JSW Group, Sekura Energy of Edelweiss Alternative Asset Advisors, Actis Llp, Sembcorp Industries Ltd of Singapore and Macquarie Group, one of the largest foreign investors in infrastructure in India.

These are among 13 potential buyers who had signed non-disclosure agreements (NDAs) for the transaction. Mint It was previously reported that Macquarie Group, JSW Neo Energy and Actis Llp have signed confidentiality agreements to acquire O2 Power.

Next step

Barclays is currently conducting the sale process for the transaction, which has an equity and enterprise value of approximately $1 billion and $2.3 billion respectively. The next stage is to select the NBOs so that successful bidders will have full access to the data room, after which binding offers will be submitted. The deadline for submission of binding offers is October 19.

“Those whose NBOs have been shortlisted will be informed shortly to move on to the next stage. Binding offers are expected on October 19, after which exclusivity will be granted to the winning bidder. It will then take some time until the documentation and conditions precedent (CP) are met. By the end of January, the deal could be completed,” said one of the two people cited above, who requested anonymity.

European alternative asset manager EQT and Singapore-based Temasek hold 51% and 49% stakes respectively in O2 Power, and have invested $500 million in O2 Power, founded by former ReNew Power executives Parag Sharma, Peeyush Mohit and Rakesh Garg. O2 Power is targeting a pipeline of around 5 GW and has already built a 4 GW pipeline.

O2 Power chief operating officer Peeyush Mohit and a Barclays spokesman declined to comment.

O2 Power is targeting a pipeline of around 5 GW and has already built a pipeline of 4 GW.

A Temasek spokesperson responded by email: “As a matter of policy, Temasek does not comment on market speculation. We therefore decline to comment.”

Spokespeople for Stonepeak, Macquarie Group, Edelweiss Alternatives and JSW Group also declined to comment.

Email queries sent to spokespersons for EQT, I Squared Capital, Actis Llp and Sembcorp on Friday evening remained unanswered by press time.

Sustained interest

There is sustained investor interest in India’s green energy transition, including renewable energy, given that it is a mature sector. India has an installed renewable energy capacity of 180.79 GW, including 73.31 GW of solar and 44.73 GW of wind. The government aims to add 50 GW of green energy capacity annually to reach 500 GW of renewable capacity by 2030.

“Considering the government’s target of achieving 500 GW of renewable energy (RE) by FY32 and cost competitiveness, RE capacity addition in the renewable space is gaining traction,” Elara Securities (India) Pvt. Ltd wrote in an Aug. 13 report, adding, “Recently, there has been an increase in the number of bids for hybrid RE and dispatchable RE tenders as compared to straight RE tender.”

“The government aims to increase renewable energy capacity to 450 GW by 2030 from 130 GW as of March 2024. To promote this, Renewable Purchase Obligations (RPOs) have been stipulated for distribution companies. They need to increase the share of renewable energy from the current 25% to 39% by FY28. This means that distribution companies will need to purchase more renewable energy and as their penetration increases, they will focus more on storage, which is essential for balancing the grid,” Crisil Ratings added in a report dated August 14.

Stonepeak is a New York-based alternative investment firm with $65.1 billion in assets under management. I Squared Capital has been active in India’s green energy sector and invested $150 million in Amplus Energy Solutions Pvt. Ltd in April 2015, which was sold to Malaysia’s state-owned oil and gas company Petroliam Nasional Bhd or Petronas in April 2019 for $1 billion. ₹2,700 crore. I Squared Capital has also set up a climate solutions platform (Hexa Climate Solutions) with Amplus founder Sanjeev Aggarwal, in which the New York-based private equity fund will invest around $500 million. It is also an investor in Singapore-based Cube Highways and Infrastructure Pte. Ltd., one of India’s largest private toll road operators, which is one of the two final bidders vying to acquire the road assets of Athaang Infrastructure from the National Investment and Infrastructure Fund (NIIF) in a deal with an equity value of around Rs 2,000 crore. ₹4,000 crore. The Canada Pension Plan Investment Board (CPPIB) is the other final bidder.

Other acquisitions

As reported by Mint, JSW Neo Energy and Sembcorp have also been shortlisted to submit binding offers to acquire a significant majority stake in NIIF-backed Ayana Renewable Power Pvt Ltd in a deal with an equity value of around $800 million. Additionally, Sembcorp and JSW Neo Energy are in contention to buy a majority stake in 1 GW of operating assets of Shell Plc’s Spring Energy Group, in a deal with an equity and enterprise value of $350 million and $1.1 billion respectively.

JSW Neo Energy has a generation portfolio of 13.6 GW, of which 2.6 GW is in the construction stage. It purchased 1.75 GW of renewable energy projects from Mytrah Energy at an enterprise value of ₹10,530 crore. Singapore-listed Sembcorp has also lined up an ambitious green energy bet in India and is also among the interested parties in Brookfield Renewable’s 1.6 GW portfolio in India in a deal expected to have an equity value of around $800 million. Macquarie Group has been investing in India’s infrastructure space since 2008 and focuses on energy transition, infrastructure and digital communications.

Actis’ green energy platform Blupine Energy Pvt. Ltd is developing grid-connected solar and wind farms, in addition to commercial and industrial (C&I) projects. Blupine Energy is Actis’ third clean energy venture in India following its deal to sell Ostro Energy to ReNew Power Ventures in 2018 for an enterprise value of $1.5 billion. It also sold Sprng Energy for an enterprise value of $1.55 billion to energy giant Shell Plc. O2 Power is also selling solar projects totaling 350 megawatts (MW) for which Edelweiss’ Sekura Energy Ltd is the front-runner in a deal that has a capital and enterprise value of $50 million and $200 million respectively, as Mint reported earlier.

Attracted by the opportunities offered by India’s green energy space, there are several deals in play, as reported by Mint.