Stonepeak fourth bidder shortlisted for $1 billion O2 Power deal

New Delhi: New York-based investment firm Stonepeak has become the fourth shortlisted bidder to make a binding offer to buy O2 Power, a renewable energy platform in India. The deal, which could be one of the largest green energy deals in the country, is expected to have an equity value of about $1 billion and an enterprise value of about $2.3 billion, two people familiar with the development said.

Mint reported on September 11 that I Squared Capital, JSW Group’s JSW Neo Energy and Macquarie Group had been selected as candidates to buy O2 Power. Talks are also underway with Stonepeak to make a binding offer.

“Stonepeak was informed that it had been selected from among the bidders who submitted NBO offers,” said one of the two people mentioned above, who asked not to be identified.

With $71.2 billion in assets under management, Stonepeak focuses on infrastructure and real assets. Seven bidders – I Squared Capital, JSW Neo Energy, Macquarie Group, Stonepeak, Edelweiss Alternative Asset Advisors’ Sekura Energy, Actis Llp and Singapore’s Sembcorp Industries Ltd – submitted non-binding offers in a sale led by Barclays to buy O2 Power.

European alternative asset manager EQT and Singapore’s Temasek-owned own 51% and 49%, respectively, of O2 Power. They invested $500 million in the company, which was founded by former ReNew Power executives Parag Sharma, Peeyush Mohit and Rakesh Garg. O2 Power is targeting a portfolio of around 5 gigawatts (GW) and has already built a portfolio of 4 GW.

Spokespeople for Stonepeak, Barclays, Macquarie Group and O2 Power Chief Operating Officer Peeyush Mohit declined to comment.

A Temasek spokesman said in an emailed response: “We decline to comment on speculation.”

Inquiries sent by email on September 18 to the spokespersons of I Squared Capital, JSW Group and EQT remained unanswered.

Successful bidders will be given full access to the data room, after which binding bids will be submitted. The deadline for submitting a binding bid is October 19, after which the successful bidder will be given exclusivity to close the transaction. The process has attracted considerable interest, with 13 potential buyers signing confidentiality agreements to sell O2 Power.

There has been continued investor interest in India’s renewable energy sector, including solar energy.

“Deal value in the renewables sector grew by a staggering 70% YoY in CY23. This is due to consolidation in the highly fragmented space that has limited returns across the value chain. This is epitomised by the fact that the top 5 players in the solar power generation sector account for just 27% of the total installed capacity, while the figure for thermal power is 45%. More consolidation is expected going forward with strong interest from foreign funds and MLIs and improving sectoral prospects,” SBI Capital Markets Ltd said in a report last month.

Read also: O2 Power acquires solar portfolio in Karnataka, Telangana

India has an installed renewable energy capacity of 180.79 GW, including 73.31 GW of solar capacity and 44.73 GW of wind capacity. The government aims to add 50 GW of green energy capacity per year to reach 500 GW of renewable energy capacity by 2030.

“In CY22 and CY23, India accounted for 20% of the M&A deal value in the renewable energy sector in Asia (as per Deloitte),” the SBI Capital Markets report said, adding, “The outlook for CY24 remains promising, with several deals in the C&I segment also flourishing, apart from the mainstay of solar.”

Mint It was previously reported that JSW Neo Energy and Sembcorp Industries Ltd have also been selected to submit binding offers to acquire a significant majority stake in NIIF-backed Ayana Renewable Power Pvt Ltd, in a transaction with an equity and enterprise value of approximately $800 million. In addition, Sembcorp and JSW Neo Energy are vying to acquire a majority stake in the operating assets of Sprng Energy Shell Plc Group with an equity and enterprise value of $350 million and $1.1 billion, respectively.