Adani arm looks to buy SoftBank’s stake in SB Energy after CPPIB deal called off

NEW DELHI :
Gautam Adani-led Adani Green Energy Ltd (AGEL) is looking to buy Japan’s SoftBank Group Corp.’s controlling stake in solar power producer SB Energy, after SoftBank’s earlier proposed deal with Canada Pension Plan Investment Board (CPPIB) was called off, said two people aware of the development.

A due diligence process has been started by AGEL, with its personnel been given access to SB Energy’ data room.

SoftBank was earlier planning to sell its 80% stake in SB Energy, which has a 7.7 gigawatts (GW) solar power portfolio in India, for an estimated $525 million to CPPIB. The remaining stake is held by Bharti Enterprises Ltd. Bank of America and Barclays were handling the sale process.

Spokespersons for SoftBank Group, Bharti Enterprises, Bank of America, and Barclays Bank India declined comment.

Queries emailed to an Adani Group spokesperson on Saturday evening remained unanswered till press time.

With businesses spanning across energy, ports, airports, logistics, mining, resources, gas, defence and aerospace, Adani Group has been ramping up its green energy portfolio and has been on an acquisition spree. It recently bought Sterling & Wilson Private Ltd’s 75MW operating solar projects and Toronto-headquartered SkyPower Global’s 50MW solar project in Telangana. Adani Enterprises Ltd has also partnered EdgeConneX to develop 1GW of data centre capacity over the next decade, which will be powered by renewable energy.

France’s Total has invested $2.5 billion for acquiring a 50% stake in 2.35GW operating solar assets of AGEL and a 20% stake in AGEL. With 3.47GW operational capacity and 15.24GW portfolio, the Adani-Total JV plans to commission 25GW by 2025.

A CPPIB group spokesperson in an emailed response said, “We don’t have comment beyond our response provided on Thursday.”

In a response to Mint on Thursday, CPPIB spokesperson in an email said, “We continue to look for opportunities for new investments in India, including in the renewables sector, as part of our Sustainable Energy Group strategy. Since the start of 2021, we have announced an increased commitment to toll roads via IndInfravit, a new JV with RMZ in real estate and a private equity co-investment in animal health. CPP Investments is a major investor in India with Canadian $12 billion invested to date, and the country is core to our global, long-term investment strategy.”

Queries emailed to a Total spokesperson; Raman Nanda, SB Energy’s chief executive; and Rohit Modi, SB Energy’s country head and president-India, on Saturday evening also remained unanswered till press time.

The valuation of SB Energy in the previous proposed deal was lower than the one expected by the renewable energy industry. SoftBank invested more than $800 million in the business in the past five years. The stake sale efforts followed SB Energy dropping its plan in July 2020 to raise $600 million through a dollar bond.

SoftBank’s previous deal with CPPIB that got called off was in the works for around a year, with CPPIB placing several pre-conditions—also referred to as condition precedents (CPs)—for SoftBank before finalizing the transaction. These included meeting certain project commissioning deadlines, securing new businesses, bond issuance as well as SoftBank bearing any future liquidated damages liability for acquiring the stake as reported by Mint earlier. Each CP had a monetary component attached to it.

Mint reported on 6 July 2020 about SoftBank’s plan to sell its entire stake, in a shift from its earlier plan to find a significant minority investor, and its separate talks with CPPIB, Canada’s Brookfield Asset Management Inc., and Abu Dhabi’s sovereign wealth fund Mubadala Investment Co. for the sale.

Coronavirus pandemic notwithstanding, there is considerable interest in India’ green economy. India is running the world’s largest clean energy programme to achieve 175GW of renewable capacity, including 100GW of solar power by 2022. According to the Central Electricity Authority, India’ apex power sector planning body by 2030, the country will require 280GW from solar energy projects.

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