In its largest-ever acquisition, industrialist Sajjan Jindal-led JSW Energy has signed an agreement to acquire Mytrah Energy’s 1,753 MW renewable energy portfolio for an enterprise value of about Rs 10,530 crore.
The deal, which is being executed through its wholly-owned subsidiary JSW Neo Energy, will help the company achieve its renewable-led capacity growth target of 10 GW by FY25 ahead of time.
Mytrah Energy’s portfolio comprises 10 wind special purpose vehicles (SPVs) with a generation capacity of 1,331 MW and 7 solar SPVs with a generation capacity of 422 MW, operating primarily in the southern, western and central parts of India. The assets have power purchase agreements and an average remaining life of 18 years, it said in a regulatory update.
The transaction, which is subject to Competition Commission of India and other customary approvals, is expected to be completed by November 15, 2022. The enterprise value of Rs 10,530 crore is after adjusting for net current assets, subject to net working capital and other adjustments.
“This deal demonstrates our strong commitment to achieve our vision of achieving 10 GW capacity by 2025 and being a leading player in India’s energy transition. This acquisition further strengthens and diversifies our operating footprint across various key resource rich states. We also believe that by leveraging our strong industry, operating and financing expertise, we would be able to significantly improve the operating performance of this entire portfolio, which will ultimately create tremendous value to our shareholders,” JSW Energy Joint Managing Director and CEO Prashant Jain said.
“JSW Energy will continue to look for more such opportunities for value accretive acquisition to aid its already ambitious growth plans for this sector. Aside from generation, we also continue to pursue our organic pursuit of storage as well as green hydrogen and its derivatives play,” he added.
The deal will help the firm increase its operational generation capacity by over 35% to 6,537 MW from the present 4,784 MW. Moreover, with the 2,500 MW of under-construction wind and hydro projects that would be commissioned over the next 18-24 months, JSW Energy’s capacity will rise to about 9.1 GW and its share of renewables to 65%.
KPMG India Services was the transaction advisor to JSW Energy, while Khaitan & Co was the legal advisor and PricewaterhouseCoopers Services conducted financial and tax due diligence.
“This is a very attractive acquisition both from ‘Build vs Buy’ trade off and relative value when compared to all acquisitions in this space in recent times. We have a multi-pronged asset optimisation, performance improvement and capital structure optimisation plan over the next 12-24 months, which will drive significant value creation over the life of the assets. Moreover, the balance sheet headroom even after consummating this large acquisition will give us the leeway to continue to pursue our growth ambitions,” JSW Energy Director (Finance) and Chief Financial Officer Pritesh Vinay said.
JSW Energy has set a target for a 50% reduction in its carbon footprint by 2030 and achieving carbon neutrality by 2050 by transitioning towards renewable energy. The company intends to reach 20 GW capacity by 2030, with the share of renewable energy increasing to 85%.
About 2.2 GW of renewable energy projects are currently under construction, with wind projects of 1.26 GW tied with Solar Energy Corporation of India likely to be fully commissioned in the next 12-18 months.
JSW Neo Energy houses the group’s renewable, green and new energy businesses. The company is also evaluating opportunities to foray into emerging energy businesses of hydro pumped storage, battery energy storage, green hydrogen, and becoming an energy products and services company.