Singapore-based Sembcorp Industries said on Thursday that it is acquiring IDFC’s remaining stake in Sembcorp Green Infra for Rs 1,410.2 crore. Sembcorp Green Infra has 1,200 MW of operational and under-development solar and wind power assets in seven states across India. The acquisition will be funded through a mix of internal funds and borrowings, the company said. Sembcorp Green Infra was incubated by IDFC private equity funds in 2008 as India’s first private equity owned renewable energy platform. IDFC had sold a controlling stake in Green Infra to Sembcorp in 2015. Sembcorp Green Infra was one of the four companies to win a 250 MW wind energy project in the country’s maiden tariff-based competitive bidding (TBCB) for wind energy, where tariffs fell to as low as R3.46/unit.
Neil McGregor, group president and CEO of Sembcorp Industries said that the acquisition “reaffirms Sembcorp’s commitment to a long-term presence in India.” With the target to set up 175 GW of renewable energy capacity by 2022, the country has become an attractive destination for foreign investors. Energy research firm Bridge to India recently noted that the country with the combined issuance of about $4 billion, the country is among the top ten green bond markets in the world. However, after low price discoveries under TBCB route, there were a few instances where state-discoms displayed reluctance in buying wind power at higher prices set under the cost-based feed-in tariff system.
This daunted investors in the sector and the Indian Bank’s Association even wrote to the power ministry about the issue. The ministry of new and renewable energy has asked state energy secretaries to make sure their respective electricity regulators approve power purchase by discoms from wind energy projects and honour power purchase agreement terms. French energy giant, which operates in India through its subsidiary Solairedirect, told FE that “till the time enabling factors like regulations for connectivity to the grid and other issues like PPA negotiations etc are tackled, there could be reluctance from investors to invest more in this sector.”
The company has always been cautious with regards to the choice of project and off-taker, and it intends to “continue in this vein taking account of the actual behavior such off-takers.” Solairedirect had won the contract to develop a 250 MW solar project in Andhra Pradesh for a final levelised tariff of Rs 3.15/unit.