Greenko to acquire Equis Indian Hydro Assets?

Greenko Group and overseas electric utilities are in separate talks with Equis Pte Ltd to acquire its Indian hydroelectric assets valued at around Rs 2,700 crore, two people aware of the development said.

Discussions to buy Equis’s Hydreq hydropower platform come against the backdrop of sovereign wealth funds Singapore’s GIC Holdings Pte Ltd and Abu Dhabi Investment Authority (ADIA) investing a total of around $2 billion in Greenko Energy Holdings till date.

The sale process is being managed by EY, the people said, requesting anonymity. Hydropower projects offer a good diversification option for green energy developers in India as it is relatively easier to switch a hydropower plant on and off, compared with thermal sources, in line with demand, experts say. “Investors want to diversify their portfolio across renewable technologies and business models.

This is where an operating hydro asset would generate interest if available at a reasonable valuation,” said Debasish Mishra, a partner with consulting firm Deloitte Touche Tohmatsu India Llp.

Hydreq owns and operates two hydroelectric plants in Sikkim that produces around 220 megawatts (MW) of power. “Greenko is interested in Equis’s hydropower portfolio, given its ambitions around the space,” said one of the two people cited earlier. Hyderabad-based Greenko has a hydropower operating capacity of 490MW and over 1,000MW in the pipeline.

Last month, Greenko agreed to buy Orange Renewable from Singapore’s AT Capital Group at an enterprise value of $1 billion. On completion of the transaction, Greenko’s total renewable energy operational capacity will increase by 1 gigawatt (GW) to 4.2GW, the second largest in India after ReNew Power Ventures Pvt. Ltd. The Hyderabad-based firm also has 600MW of clean energy projects under construction. “Operational hydropower projects are in great demand today, given their ability to cater to peaking power.

The project is also seeing interest from global utilities, large funds and Greenko,” said the second person.

The sale of Hydreq was proposed after a group of investors led by Global Infrastructure Partners announced the Equis Energy acquisition plans for $5 billion in October last year. Mint reported on 1 May about Equis’s plans to sell Hydreq. Queries emailed to the spokespersons for Greenko, Equis and EY remained unanswered. Greenko also plans to set up India’s first large integrated clean energy storage project along with generation projects totalling 10GW at an estimated investment of around Rs 50,000 crore.

The company plans to make solar and wind power available round the clock by creating two large water pump storage projects. While GIC and ADIA hold 60% and 14%, respectively, in Greenko, founders Mahesh Kolli and Anil Kumar Chalamalasetty together hold 26% in the company.

The company expects to have an Ebitda (earnings before interest, taxes, depreciation and amortization) of $725 million by March 2019. The proposed transaction comes at a time when there have been concerns about faltering hydropower generation in the country and delays in project execution.

India has a power generation capacity of 343,898MW, of which 13% or 45,403MW is hydropower.