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Hinduja National Power looks to acquire Kiran Energy assets

According to reports, Hinduja National Power Corp. Ltd, part of the diversified Hinduja Group, is the latest company to express interest in acquiring the assets of Kiran Energy Solar Power Pvt. Ltd, according to two people aware of the development.

Hinduja National Power has initiated discussions to acquire ownership of Kiran Energy, from private equity funds, the people said on condition of anonymity.

PE funds Argonaut Ventures, New Silk Route (NSR) and Bessemer Venture Partners (BVP) India own nearly 80% of the Mumbai-based firm while founder Ardeshir Contractor and Alan Rosling, a former Tata Sons executive director, and a few others own the rest. The deal size could be $100-150 million (Rs640-1,000 crore), said one of the two people cited above.

“There are interests from many parties and the discussions are on with them. We can’t disclose any further details at this point of time,” said Contractor. Mails and calls made to Ashok Puri, managing director of Hinduja Power, did not elicit any response. Mails sent to BVP India, Argonaut Ventures remained unanswered while an NSR spokesperson declined to comment.

Amplus Energy Solutions Pvt. Ltd, backed by US private equity (PE) firm I Squared Capital, is also interested in acquiring Kiran Energy given the high electricity tariffs awarded in some of the power purchase pacts signed by the Mumbai-based solar power producer, Mint reported in January.

Kiran Energy was founded in 2010 by Rosling, a former executive director of Tata Sons, and Contractor, a former head of KPMG’s Investment Banking business in India. Kiran Energy has built a portfolio of around 83 megawatts (MW) including a 60MW plant in Rajasthan. Kiran Energy also owns a 74% stake in a joint venture—Mahindra Solar One, where the rest is held by the Mahindra Group. The joint venture, set up in 2015, has a pipeline of solar projects totalling 50 MW.

“Recent headwinds around utilities walking away from signed / agreed PPAs, debate around reasonable returns being available in the projects won under recent round of auctions, slowing down of bids, and disconnect between return expectations of seller vis-a-vis buyer has not helped the cause of the solar power sector,” said Manish Aggarwal, partner, head – corporate finance, infrastructure – equity and debt, KPMG in India.

Hinduja National Power is expanding its power generation capacity of 10,000 MW over the next 10 years at an expected investment of $10 billion across India. The total projected capacity will be a mix of thermal, hydro, nuclear and renewable energy, according to the company website.

Last year, Hinduja National Power had commissioned its 1,040MW coal-fired thermal power project located near Visakhapatnam. The company has commissioned 2×520 MW thermal power plants, located on the coast of the Bay of Bengal at Pavalavasa, Visakhapatnam.

Indian clean energy space has witnessed large deals in the past including Tata Power Co. Ltd buying the renewable energy portfolio of Welspun Energy Ltd for $1.4 billion; acquisition of SunEdison’s Indian assets by Greenko Energies Pvt. Ltd for $392 million last year.

“While there is huge capital that’s chasing this space, and increasing interest from investors, structured growth of sector that offers reasonable returns to investors overseas is a must to see more M&A activity in this space,” Aggarwal added.

Besides Indian funds, various global funds have evinced interest in Indian renewable space in recent past. The foreign funds include I Squared Capital, Canada’s Brookfield Asset Management, Canada Pension Plan Investment Board (CPPIB) and Caisse de Depot et Placement du Quebec (CDPQ). CDPQ had committed investments of $150 million for renewable energy in India last year.

In 2014, the National Democratic Alliance government announced an ambitious clean energy target of adding 175GW by 2022. Of the total targeted capacity, 100GW is to come from solar power projects and 60GW from wind power. However, a parliamentary standing committee on energy has raised concerns over the slowdown in solar power production. Last month, its report said the government should adopt a more proactive approach to arrange finances for solar power projects.

It also said that the 40,000MW target of grid-connected rooftop solar by 2022 is “unrealistic” and it is highly unlikely that this target will be achieved.

The per unit price of solar power has dropped about 77% in the past seven years from Rs10.95 in December 2010 to Rs2.44 in May 2017.

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