The Ostro acquisition increases ReNew Power’s capacity to over 5,600 MW, the latest investment takes CPPIB’s total commitment in ReNew Power to $391 million.
ReNew Power Ventures Pvt. Ltd on Monday said it is acquiring Ostro Energy Pvt. Ltd, which has 1.1 gigawatts (GW) of renewable assets, for an undisclosed sum.
In a related development, Canada’s largest pension fund has invested an additional $247 million in ReNew Power to support the Ostro acquisition.
Financial details of the transaction were not disclosed. Mint reported in December that ReNew Power would ascribe an enterprise value of around Rs10,000 crore for Ostro Energy.
With the acquisition of these assets, ReNew Power’s capacity will exceed 5,600 megawatts (MW). Over 65% of the combined portfolio capacity (ReNew Power and Ostro Energy) is already operational, the company said. Ostro Energy’s assets are spread across Andhra Pradesh, Karnataka, Telangana, Rajasthan, Madhya Pradesh and Gujarat.
Factors such as size, quality and age of the Ostro Energy assets were key attractions for ReNew Power, according to a person involved in the transaction speaking on the condition of anonymity.
“Ostro has built very high quality assets and the average age of these assets is around 2-3 years, which means that the acquirer will be able to use these for a very long period of time,” he said.
There are very few buyers in the country for an asset of this size and that was an advantage for ReNew Power, he said.
To support ReNew’s acquisition of Ostro Energy, Canada Pension Plan Investment Board (CPPIB) has invested $247 million in the company.
The latest investment takes CPPIB’s total commitment in ReNew Power to $391 million. In January, CPPIB invested $144 million in the company.
“We are pleased to further support ReNew Power in its latest acquisition, which further strengthens their position in India’s renewables sector. Our additional investment aligns well with CPPIB’s overall power and renewables strategy, providing greater diversification for the CPP Fund,” said Scott Lawrence, managing director, head of fundamental equities at CPPIB.
ReNew Power was founded in 2011 by Sumant Sinha, a former chief operating officer at wind turbine maker Suzlon Energy Ltd. ReNew Power currently has green energy assets exceeding 4,500MW, which includes a commissioned capacity of approximately 2,800MW, the company said in a statement.
Ostro Energy has a total capacity of more than 1,100MW, out of which nearly 850MW is already commissioned. Last year, ReNew also bought 103MW of assets from KCT Renewables.
As demand for electricity increases, solar and wind are attractive sources of power, the person cited above added.
“CPPIB will continue to seek opportunities to expand their power and renewables portfolio as demand grows worldwide along the transition to renewables,” he said.
Renew Power also counts investors such as Goldman Sachs, Asian Development Bank, Abu Dhabi Investment Authority, Global Environment Fund and Japan’s JERA Co. Inc. as its shareholders. In February 2017, Japan’s JERA Co. Inc. bought a 10% stake in ReNew Power, valuing the company at $2 billion.