IDFC Alternatives has signed a definitive agreement to acquire three solar projects aggregating 45 MW capacity from Punj Lloyd at an estimated enterprise value of Rs.3.5-3.75 billion (~$52.3-56 million). These projects include one operational project of 5 MW capacity in Rajasthan, and two operational projects of 20 MW each in Punjab.
The transaction calls for Punj Lloyd to divest its entire shareholding in the subsidiaries that own and operate the solar projects. These include:
- a 5 MW solar project, owned and operated by Punj Lloyd Solar Power, with a 25-year Power Purchase Agreement (PPA) signed with NTPC Vidyut Vyapar Nigam, at a tariff of Rs.12.73 (~$0.19)/kWh
- a 20 MW solar project owned and operated by Punj Lloyd Surya Urja, with a 25-year PPA signed with Punjab State Power Corporation at a tariff of Rs.8.49 (~$0.127)/kWh
- a 20 MW solar project owned and operated by Punj Lloyd Sunshine, with a 25-year PPA signed with Punjab State Power Corporation at a tariff of Rs.7.45 (~$0.111)/kWh
“Increased activity in the secondary market is a positive sign for the young Indian solar sector,” said Raj Prabhu, CEO and Co-founder of Mercom Capital Group. “As the market matures and institutional investors like pension funds and investment firms become more comfortable investing in solar projects, we will see more appetite for quality projects with attractive returns.”
The IDFC Alternatives transaction will be closed once the customary approvals and closing conditions are obtained. Greenstone Energy Advisors is acting as the exclusive financial advisor to Punj Lloyd for the deal.
According to Mercom’s India Quarterly Report, over 1 GW of project portfolios have been acquired this year alone, including Tata Power’s acquisition of Welspun’s 1.1 GW renewable project pipeline for $1.4 billion.