NEW DELHI : Shell Plc and Adani Group are likely to be front-runners to acquire Actis Llp’s Indian renewable energy platform Sprng Energy for around $1 billion in equity, two people aware of the matter said.
The binding bids for Sprng Energy are to be placed by 15 March, in what would be one of the largest deals in India’s green energy sector.
Seventeen firms had submitted non-binding bids in the first stage of the sale process, which Bank of America is managing.
In the second stage, five—Shell plc, Adani, Canada Pension Plan Investment Board (CPPIB), Singapore’s Sembcorp Industries Ltd and ArcelorMittal—are conducting due diligence.
According to the people cited above, who spoke on condition of anonymity, the enterprise value of the deal is estimated at around $2.5 billion.
“Shell and Adani are likely to be front-runners for the Sprng Energy transaction. Almost all the non-binding bids placed in the first stage by everyone were in or around $1 billion in equity," one of the two people cited above said.
Mint reported on 8 December that around 20 entities, including BlackRock Inc., Adani, JSW Group, Brookfield Asset Management Inc., KKR, Macquarie Group and four Canadian pension funds—CPPIB, CDPQ, Ontario Municipal Employees Retirement System (OMERS) and Ontario Teachers’ Pension Plan—had signed non-disclosure agreements for the transaction.
Sprng Energy has an operational portfolio of 1.75 gigawatts (GW) and 5GW under various stages of implementation.
The share purchase agreement is expected to be signed by the end of March.
A Bank of America spokesperson and an external spokesperson for ArcelorMittal declined to comment. Queries emailed to the spokespersons for Actis, Shell India, CPPIB, Sembcorp Energy India Ltd, and Adani Group on Tuesday remained unanswered till press time.
In 2018, Actis sold Ostro Energy Pvt. Ltd to ReNew Power Ventures in 2018 at an enterprise value of $1.5 billion. Last August, ReNew Power Pvt. Ltd completed its merger with Nasdaq-listed special purpose acquisition company (SPAC) RMG Acquisition Corp. II (RMG II), putting an enterprise value of around $8 billion and an equity value of $4.4 billion on the new entity, ReNew Energy Global Plc. Also, Adani Green Energy Ltd (AGEL) bought Japan’s SoftBank Group Corp. and Bharti Enterprises Ltd owned solar power producer SB Energy India for an enterprise value of $3.5 billion.
The sale of Sprng Energy comes against the backdrop of Actis’ plans to invest $850 million in India to build two green energy platforms, as reported by Mint earlier.
The first platform will focus on setting up grid-connected solar and wind power parks, while the second will cater to the growing commercial and industrial (C&I) segment. Actis, which invests only in emerging markets, has committed $2.1 billion for India so far across energy, financial services and real estate.
There is growing interest in India’s green economy following the government’s focused actions to combat climate change, as evident in the latest Union budget measures to reduce carbon emissions and intensity.
India has also unveiled its new green hydrogen policy that promises incentives ranging from cheaper renewable power, fee waiver for inter-state power transmission for 25 years for projects commissioned before June 2025, and land in renewable energy parks, among others.
The idea is to leverage cheap green energy to manufacture the new-age emission-free fuel.
India plans to meet half of its energy requirements from renewable energy by 2030 and increase non-fossil fuel power generation capacity to 500GW by the end of this decade as pledged by Prime Minister Narendra Modi at the CoP-26 summit in Glasgow in November last year.
He also pledged to cut India’s carbon emissions by 1 billion tonnes by 2030, reduce the economy’s carbon intensity by less than 45% by the end of the decade and achieve net-zero carbon emissions by 2070.
India is running the world’s largest clean energy programme.
According to the Central Electricity Authority, by 2030, the country’s power requirement would be 817GW, more than half of which would be clean energy.
Shell has been looking at Indian clean energy space opportunities and was also is in talks with state-run Convergence Energy Services Ltd to invest $500 million in the state-run firm’s decentralized solar business as reported by Mint earlier.
