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Sun 2 Jun 2019 09:25 AM

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Goldman-backed ReNew power plans asset sale as IPO shelved

Goldman Sachs, CPPIB and Abu Dhabi Investment Authority, are investing $300m in ReNew Power via a rights issue

Goldman-backed ReNew power plans asset sale as IPO shelved

India’s largest green energy company, ReNew Power Ltd., is considering raising funds through asset sales, after shelving plans for an initial public offering.

Backed by Goldman Sachs Group, the company has renewable assets of over 7 gigawatts, of which more than 4 gigawatts are operational. It makes sense to sell some assets when “the ability to execute and the opportunity to grow” exceeds the ability to finance projects and the company could “sell assets outright” or have co-investors, ReNew Power Chairman Sumant Sinha said, without elaborating on the amount of capacity sale or the funds being targeted.

“They can co-invest along with us or buy our assets while we continue to run those assets,” he said in an interview in his office in Gurugram near New Delhi. ReNew Power will look at either creating its own infrastructure investment trust, or InVit, to raise funds or use an existing structure.

The company isn’t alone in withdrawing plans for an IPO or considering an infrastructure investment trust. Rival solar power developer Acme Solar Holdings Pvt. last year put on hold a planned public listing and said it will opt instead to raise funds through a private InVit, citing turbulence in the South Asian country’s stock market and uncertainty over renewable energy policies.

“There is no specific plan for the IPO right now,” Sinha said “Elections are now behind us. We’ll have to see how markets evolve, what the government does, there are these key issues to be addressed about how the sector can be in a healthier position.”

Industry groups have said the viability of Indian wind and solar projects is being tested by tariff caps set during the auction process, the preferred method for attaining Prime Minister Narendra Modi’s ambitious goal of installing 175 gigawatts of renewable capacity by 2022. While the auctions have enabled distributors to lock in some of the cheapest green power rates in the world, industry groups said it’s leading to unsustainably low electricity prices.

Transmission foray

The company is now looking to enter the transmission business, with plans to bid for government tenders from June, Sinha said. ReNew Power has qualified for 10 bids and most transmission projects being auctioned are related to the green corridor, a government project for transmitting power from renewable-rich states and connecting clean power capacity, he said.

ReNew has appointed Ajay Bhardwaj, the former head of rival transmission infrastructure builder Sterlite Power Grid Ventures Ltd., as the president of its new business, Sinha said.

Goldman Sachs, Canada Pension Plan Investment Board and Green Rock, hold 48.62%, 16.22% and 15.92%, respectively, of ReNew Power’s paid-up share capital as of May 2018.

Goldman Sachs, CPPIB and Abu Dhabi Investment Authority, are investing $300 million in ReNew Power via a rights issue, the Economic Times reported Friday, citing people with knowledge of the matter it didn’t identify. The proceeds will be used to finance growth and repay existing debt, it said. ReNew Power officials declined to comment.

The company’s unit, Renew Solar Power Pvt., has bonds worth 1 billion rupees maturing in November, and Renew Power has 8.5 billion rupees of securities maturing in March 2020, according to data compiled by Bloomberg.

Ratings assessor S&P Global Ratings assigned a ‘BB-’ long-term issuer credit rating to ReNew Power in May, saying the action reflects the company’s relatively weaker receivables profile compared with peers and expects leverage to remain high due to debt-funded capital expenditure on capacity additions.

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