In what would have been one of the largest acqusitions in India’s solar history, Greenko, in June, had agreed to buy Orange Renewable at an enterprise value of $1 billion. Greenko was to make an equity payout of around $300 million. If the deal had been successful, it would have increased Greenko’s capacity by 1 GW to 4.2 GW and catapulted it to the position of India’s second largest renewable energy firm.
According to reports, Greenko Group founder Mahesh Kolli has said that “the contract has expired because of a technical reason.” Investment bank Rothschild has now kickstarted the process to find a fresh buyer for Orange Renewable.
Industry observers are not surprised at Greenko’s plan to call off the deal. In late-August, newspapers had reported that Orange’s wind project in Andhra Pradesh could be a stumbling block in the deal. Greenko was also concerned about Orange’s asset holding firm being regarded as a ‘core investment firm’, requiring it to follow the Reserve Bank of India’s guidelines.
Headquartered in New Delhi and owned by Singapore-based AT Capital with billionaire Arvind Tiku as its main sponsor, Orange has a 750 MW operational asset (200 MW solar, 550 MW wind) with footprints in the Indian states of Andhra Pradesh, Karnataka, Madhya Pradesh, Rajasthan and Maharashtra. An additional 250 MW is under construction and the company has permits for 1 GW in hand.
With an equity value of about $350 million and debt base of around $650 million, Orange was put on block in August 2017. After initial talks, ReNew Power pulled its name out of the potential buyer’s list. Greenko then stepped in to buy the holding company that owns all the assets.
Of late, India’s renewable space has witnessed several large ownership shift – in 2016, Greenko had bought SunEdison’s 587 MW Indian wind and solar projects for $0.39 billion. The same year, Tata Power bought Welspun’s renewable portfolio for $1.4 billion. In 2018, ReNew Power acquired Ostro Energy for a $ 1.5 billion enterprise value.