Sembcorp to invest $227m in Indian RE company Green Infra

Its share amounts to 60%.

Sembcorp is entering India’s attractive renewable energy market, a major step in the company’s strategy to grow its renewable energy business.

According to a media release, Sembcorp Utilities has signed agreements to acquire a 60% stake in Green Infra, a renewable energy company in India with a wind and solar portfolio.

Sembcorp signed a shareholders agreement and a share purchase agreement with IDFC Private Equity Fund II and IDFC Private Equity Fund III, to invest in a 60% stake in Green Infra for Rs 10.6 billion (approximately S$227 million). The investment will be held through Sembcorp Renewables, a wholly-owned subsidiary of Sembcorp Utilities.

IDFC Private Equity Fund III, which is managed by IDFC Alternatives, will continue to hold the remaining 40% stake in Green Infra. IDFC Alternatives is indirectly wholly-owned by IDFC Limited, which is listed on the Mumbai Stock Exchange and is 16.4% owned by the government of India.

Tang Kin Fei, Sembcorp Group President & CEO, says, “Green Infra’s strong capabilities and experienced team will help to accelerate our growth in the renewable energy sector not only in India, but globally. Meanwhile, with investments in both thermal and renewable energy, Sembcorp is well-positioned for growth in the energy sector with a balanced portfolio of energy assets.”

Here’s more from Sembcorp:

One of the leading renewable energy groups in India, Green Infra adds to Sembcorp a sizable 516-megawatt operating asset portfolio. It also holds assets under development that will bring its total installed power capacity to 700 megawatts by 2015. Comprising 665 megawatts of wind and 35 megawatts of solar assets in operation and under development, and located in six renewable resource-rich states in the southern, western and central regions of India, Green Infra’s portfolio will almost triple Sembcorp’s current renewable energy generation capacity globally to over 1,000 megawatts. The acquisition will also provide Sembcorp with solar power capabilities, and broadens the technology footprint of Sembcorp’s current renewable energy portfolio beyond wind, biomass and energy-from-waste.

The major part of Green Infra’s electricity output is sold under long-term power purchase agreements with India’s state electricity boards, while the remaining output is sold under long-term contracts with commercial customers. In addition, Green Infra has identified a strong pipeline of new projects to underpin its future growth.

The Rs 10.6 billion (approximately S$227 million) acquisition cost will be funded through a mixture of internally generated funds and debt financing. Completion of the transaction is expected by the end of the month.

The acquisition is not expected to have a material impact on the earnings per share and net asset value per share of Sembcorp Industries for the financial year ending December 31, 2015.