New Delhi: In what will rank among the largest deals in the India’s clean energy space, United Arab Emirates’ Masdar (Abu Dhabi Future Energy Company) has acquired around 20% stake in Munjal family-promoted Hero Future Energies Pvt. Ltd for $150 million.
Masdar is owned by Abu Dhabi government’s sovereign wealth fund Mubadala Investment Company. Sovereign wealth funds are preferred for their so-called patient capital, which seeks modest yields over time. Some of the active sovereign wealth funds in Indian clean energy space are Investment Corporation of Dubai, Singapore’s GIC Pte Ltd and Abu Dhabi Investment Authority.
“Hero Future Energies (“HFE” or the “Company”), the leading clean-tech company, announces a US$150 million strategic investment to fund the expansion of its renewable energy portfolio, including in selected international geographies,” the firm said in a statement.
Backed by International Finance Corp (IFC), the private sector investment arm of the World Bank, the renewable energy firm plans to expand its operations in Africa and India, and be present across the solar energy value chain.
This is the second strategic investment in Hero Future Energies after IFC invested $125 in the firm, having an operational portfolio of 1,300 mega watt (MW) in 2017. HFE plans to build a 5 gigawatt (GW) portfolio by 2022. It is also plans to put up a large grid-connected solar plant of up to 100MW capacity in South-East Asia. Alongside traditional renewable projects of solar and wind, HFE will look to deliver futuristic renewable energy projects utilising new technologies, including battery storage and floating solar.
India and UAE have been expanding their engagement on the energy security front. State-run Abu Dhabi National Oil Co (Adnoc) last year joined hands to set up the largest global refinery and petrochemicals complex, coming up at Ratnagiri in Maharashtra. Adnoc, the world’s 12th largest oil company by production has also committed to India’s crude oil reserve programme till date.
There is a growing overseas interest in India’s emerging green economy. A case in point being Malaysia’s state-owned oil and gas company, Petroliam Nasional Berhad, or Petronas, acquiring I Squared Capital’ majority stake in Amplus Energy Solutions Pvt. Ltd, one of India’s largest rooftop solar power producers.
This comes at a time when the Indian renewable energy space is witnessing growing consolidation, amid falling tariffs and the capital-intensive nature of the business. This has made availability of low-cost funds critical for the success of a project, particularly at the initial stage.
Private equity fund Actis LLP is credited with India’s largest clean energy deal wherein ReNew Power Ventures acquired Ostro Energy Pvt. Ltd from Actis LLP at an enterprise value of $1.5 billion last year.