Sensing a golden opportunity to acquire a stake in leading renewable energy companies in India, Canadian investors are readying nearly a billion dollars.
According to media reports, two Indian renewable energy companies — ReNew Power and Azure Power — may receive investment from major Canadian investors. The reports come at a time when almost all Indian renewable energy companies are struggling with increased apprehensions over policy and regulatory matters as well as a cash crunch in the absence of timely payments.
Asset management company Brookfield is reportedly planning to inject $800 million in ReNew Power Limited, India’s largest renewable energy developer. Goldman Sachs currently holds a 48% stake in ReNew Power and is expected to sell some of its share to Brookfield through this transaction. Abu Dhabi Investment Authority, JERA, Asian Development Bank, Canada Pension Plan Investment Board, and Global Environment Fund are the other minority stakeholders in ReNew Power.
ReNew Power recently became the first Indian company to have achieved 5 gigawatts of operational renewable energy capacity. However, its road to success has not been without challenges. The company, at one time, planned to launch an initial public offering. It did not follow through with these plans likely due to the non-conducive market environment.
CEO Sumant Sinha has expressed serious concerns over the efforts by one of the state government’s to renegotiate renewable energy tariffs. The company is also believed to be facing the challenge of a lengthy delay in payments from power distribution utilities that procure renewable energy. We recently reported that the company could be the latest among several other Indian companies to contemplate sale of operational assets to raise to funds.
CDPQ, an existing investor in Indian solar power developer Azure Power, is planning to inject addition equity worth $75 million to increase its stake in the company. According to a press release, CDPQ will increase its stake in the NASDAQ-listed Azure Power from 41.4% to 49.4% following this investment.
Azure Power is among the leading solar power developers in India with a portfolio of 3 gigawatts, including an operational capacity of 1.8 gigawatts. The company regularly participates in Indian solar power auctions and issues green bonds as well. It had raised $500 million in 2017 and $350 million earlier this year through green bonds.
Given the grand plans announced by the Indian government regarding increased use of non-fossil fuel sources of energy and the plethora of challenges being faced by the companies, this seems to be a good time for investors to pick up stakes in industry leaders and harvest handsome gains later.