US-based investment company KKR & Co. has announced yet another investment in India power sector, this time in the solar power market.
Shapoorji Pallonji Group has sold solar power projects with total capacity of 317 megawatts for US$200 million. This transaction is believed to be KKR’s second investment in India’s power sector. The company had earlier invested in an infrastructure investment fund for transmission projects.
This is not the first asset sale by Shapoorji Pallonji Group, which has been struggling to repay loans. Earlier this year, it had sold 194 megawatts of capacity to Actis Group’s Sprng Energy for US$200 million.
This strategy to sell assets is part of a long-term plan of Shapoorji Pallonji aimed at capital infusion for the development of new projects. However, the group has been struggling to pay outstanding loans which has acted as a catalyst to this asset sale initiative. One of the group companies had taken loan from another group company, Sterling & Wilson Solar. The listed company is among one of the largest EPC service providers in the world, having executed one of the largest solar power parks in the Middle East.
The outstanding loan is worth over US$300 million. Group’s inability to make timely payments against this loan has had an adverse impact on Sterling & Wilson Solar as well with investors questioning the group’s move to list the company under such conditions.
Over the last few months, several companies with renewable energy not at the core of their business have sold renewable energy assets due to deteriorating financial situation. Essel Infraprojects sold around 700 megawatts of solar power projects to Adani Group. A subsidiary of financially-troubled IL&FS Group also sold 873 megawatts of wind energy assets to existing investor Orix.
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