The Canada Pension Plan Investment Board (CPPIB) is set to invest approximately $200 million (~₹12.9 billion) in ReNew Power Ventures in the form of compulsory convertible preference shares (convertible debt) that will convert to equity shares at the time of initial public offering.
A second transaction was also announced where CPPIB will acquire 6.33 percent of equity share capital of ReNew Power from Asia Development Bank (ADB). ReNew had received a $50 million (~₹3.4 billion) in equity investment from ADB in 2014.
JERA, a joint venture company of two of Japan’s largest utility companies – Tokyo Electric Power and Chubu Electric Power, invested $200 million (~₹12.9 billion) for a 10 percent stake in ReNew Power in February this year. ReNew Power was valued at approximately $2 billion (~₹128.9 billion) at the time of the transaction. The additional investment would put ReNew Power’s valuation at a little over $2 billion (~₹128.9 billion). CPPIB’s acquisition of ADB stake at approximately $150 million (~₹9.67 billion) means a healthy 3x return for ADB.
In February this year, the company also raised $475 million (~₹30.6 billion) through its subsidiary Neerg Energy by selling green bonds to overseas investors as the company planned to refinance its debt from 13 green projects.
ReNew Power’s investor base includes – Goldman Sachs, Asian Development Bank, JERA, Abu Dhabi Investment Authority and Global Environment Fund among others.
According to Mercom India Research, ReNew Power has installed solar capacity of 1,091 MW with another 100 MW under development and wind capacity of 1,260 MW.
According to Mercom’s India Solar Project Tracker, the average tariff of ReNew Power’s installed solar projects developed between 2011 – 2017 is approximately ₹5.75 (~$0.089)/kWh with the tariffs ranging between ₹8.5-₹4.4 (~$0.13 – $0.07)/kWh.
Commenting on the deal, Raj Prabhu, CEO of Mercom Capital Group said, “Investment by pension funds reflect a level of maturity in the sector and a big endorsement for ReNew Power’s execution. Pension funds typically shun risk and this investment is hopefully an endorsement for Indian wind and solar sectors as an asset class.”
Image credit: ReNew Power