In what’s being billed as the biggest buyout in the renewable energy space,Tata Power Renewable Energy Limited ( TPERL) has announced the acquisition of Welspun Group’s solar and wind energy subsidiary Welspun Renewable Energy private limited ( WREPL) at an enterprise value of Rs 9,249 crore. Senior executives at Tata Power, parent of the TPERL, said the firm had outbid several financial and strategic players to clinch the deal, announced late Sunday night.
The assets of Welspun Energy have been on the block for a year with Japan’s SoftBank, Hero Future Energies and ReNew Power being potential suitors.
The deal will take Tata Power’s renewable energy generation capacity to to 2,300 MW, which senior executives claim will make it the largest renewable energy producer in India.
The transaction values the power assets at Rs 7.7 crore per megawatt and will be funded by both debt and equity in two stages. Anil Sardana, CEO and managing director Tata Power said, “the entire asset will be begin generating revenues by the time we close the deal.”
Company officials said TPERL will raise Rs 5,500 crore in debt but claimed that it will leave the company’s debt equity ratio unchanged, given the assets are expected to generate an internal rate of return of 15 to 16%.
WREPL has one of the largest operating solar portfolios in India spread across ten states. The assets comprise close to 1,140 MW of renewable power projects— about 990 MW solar power and about 150 MW of wind power, Tata Power said in a statement.
Of the1,140 MW portfolio, nearly 1,000 MW of capacity is operational while the remainder is in advanced stages of implementation.
“In addition the assets also have a lot of extra land which can be used to add generation capacity in future” Sardana added. TPREL currently operates 294 MW of Renewable power capacity and 500 MW of Renewable assets which are being carved out of Tata Power into TPREL through a court process.
In addition, almost 400 MW of Solar and Wind power projects are under implementation. With mostly State Electricity Boards ( SEBs) as customers for the newly acquired assets, Anil Sardana said the Tata Power does not foresee any significant risk.
“We are convinced that the assets are of the highest quality and have been constructed with a long term view” he added.