Japan’s ORIX Corporation has entered into a framework pact to invest at least $980 million to buy a stake in renewable energy firm Greenko Energy Holdings through a combination of primary and secondary transactions.
The transaction values Greenko equity at about $5.75 billion. In addition to acquiring 20% stake in Greenko from the founders’ group, ORIX will integrate its entire wind power generation business in India into Greenko. The integration will be in exchange for Greenko’s new shares.
Greenko said ORIX has 873 MW of operating wind assets in India. The acquisition will add approximately $100 million to EBITDA in the first full year after close, it said.
It will increase Greenko’s overall operational RE capacity to about 6.5 GW, including the recently announced acquisition of a 1.2 GW hydro asset.
Greenko also has an additional 8 GW under construction, largely from its Integrated Renewable Energy Projects (IREP). Managing Director and CEO Anil Chalamalasetty said “the transaction will further drive capacity, revenue, EBITDA and overall earnings growth.”
He said Indian energy markets are transitioning from deficit markets to demand-driven contracts requiring reliable, flexible and cost- competitive energy. Greenko is focused on building IREP with storage, which can compete with conventional energy assets in quality, quantity and cost, he said.
“We are excited to partner with Greenko through this investment, which represents a very important step for us in accelerating our corporate strategy of contributing to build a sustainable society,” said Hidetake Takahashi, Head of Energy and Eco Services Business Headquarters of ORIX.
Citing Greenko’s focus on IREP, ORIX said State-owned power companies in India which have high procurement needs for electricity originating from renewable energy as well as companies with a high level of environmental awareness are expected to drive demand. The renewable energy market in India has reached grid parity thanks to lower construction costs and favourable climate conditions, yielding cost advantages even when compared to thermal power. India has set a renewable energy target of 175 GW by 2022 against an expected renewable energy level of 113 GW in 2020, ORIX said.