US-based renewable energy major SunEdison, reportedly facing a liquidity crunch, said on Tuesday said it was looking at different options to raise money, reports fe Bureau in Chennai. These included selling assets and tapping private investors to fund around 2 GW of renewable energy projects in India alone.
Responding to reports to the effect the company is going to monetise its close to 400 MW of solar assets by selling to third parties in India, Pashupathy Gopalan, SunEdison’s president, Asia-Pacific and sub-Saharan Africa, said as part of its strategy the company has been looking at various options including selling assets.
Gopalan refused to comment specifically on the sale of 400 MW as reported in a section of the media. “Selling assets has been a business practice of the company,” he said.
Currently the company has assets that produce 450 MW of power. While declining to comment on how much of it will be put on the block, Gopalan said the company would look at only operational assets in the country for any dilution or sale purpose.
He said that its fund-raising vehicle, or yieldco, in the US was not meeting its funding needs as it has been trading below expectation on the bourses. He added the company has decided to terminate its planned acquisition of Continuum Wind Energy in India. The company was planning to acquire 412.5 MW of wind projects but is now focused on safeguarding its liquidity and preserving the cash. This was in line with company’s recent decisions to optimise its business operations globally in alignment with current and future market opportunities.
Conventionally, the yieldco has been the major source for capital, but in the last few months this avenue had slowed down in the US market. Therefore, the company was seriously looking at is raising money from the private investors and selling assets. Globally the company sells around 10% of its portfolio on an average, said Gopalan. A yieldco is a company set up by a sponsor or a parent company. The sponsor sells cash-flow-yielding operating assets to the yieldco, which might later get itself listed. “In India, we are looking at pension and sovereign funds to be our equity investment partners,” Gopalan said.
The company has put 1,292 MW in the yieldco, including 301 MW from India. SunEdison said till now it had restriction to sell equity due to regulatory issues since the company has not registered here and is not listed in India. The strategy will also be taken up for Indian operations also, said Gopalan.
He said that the company is also looking at adopting the warehouse concept, which prevails in other parts of the world. The concept is the company would develop projects, after which it will either rope in an investor or sell the project to the third party. So far the company has developed and sold projects worth $3 billion globally. Some of the major investors include Goldman Sachs, JPMorgan and First Reserve.
The fund raising is to support company’s plan to add 2 GW of new projects in India over the next 18 months to two years. This would require investment to the tune of $2billion. Of the total, $1.4 billion will be from loans, and the balance $600 million would be the equity component, which will be funded through the yieldco from outside investors and from the proceedings of the assets sold.
The company, which earlier said that it would look at the inorganic route aggressively, has decided to go slow on this and instead will focus more on organic growth.
While the Continuum sale has been called off, the company has said it has finished acquiring Spanish developer Fersa’s 100 MW wind assets in Karnataka and Rajasthan.
On the rumoured job cuts in India, he said, “There has not been any sort of downsizing per se. You may say that around 5% of the workforce has been lost by the company as part of the restructuring. Currently the company has around 250-260 employees in India.”
Gopalan said that India is an important market for SunEdison globally as around 20% to 25% of global business is in India, which is largest pie for the US-based renewable major. “We continue to be enthusiastic about Indian market,” he said.