Actis LLP, the private equity investor, has reportedly agreed to acquire the solar power projects of Essel Infraprojects Ltd. in a deal which could be valued between ₹5,500-6,000 crore. Sources close to the matter mentioned that a formal announcement regarding the deal would be made by the end of December.
According to records, Essel Infraprojects is a part of Subhash Chandra’s Essel Group and had put its solar power assets on the block earlier in the year. The company has spent a considerable portion of 2018 negotiating deals with potential buyers. The total installed capacity and under-construction projects of Essel amount to 685 MW.
Industry exerts have said that the renewables sector in India has been experiencing an upsurge in consolidation agreements, since smaller companies are looking to exit owing to low tariffs and tough competition. It has also been noted that access to cheap funds are drying up, hindering success for these companies.
Reports in May had indicated that Actis, Greenko, Tata Power and Hero Future Energies were in discussions with Essel to buy its solar plants. The sources further informed that Essel’s assets are having power purchase agreements (PPAs) with state governments that go as high as ₹8 per kWh, with the average PPA being ₹5.50 per kWh.
Solar power tariffs in India has fallen to a record low of ₹2.44 per kWh in 2017, from ₹10.95-12.76 per kWh during the 2010-11 period. Sekura Energy Ltd. had agreed to purchase four power transmission assets from Essel Infra in October, for a reported enterprise value of ₹6,000 crore. Essel Group is aiming to exit its power transmission and renewable energy businesses with the sale of its assets.
Supposedly, Essel is seeking expansion into emerging industries like railways, water and municipal solid waste. It expects that selling off its assets in transmission and renewable energy would help to fund its venture into new businesses.