More than 10 entities including power sector companies and private equity investors have shown interest in renewable energy assets of Infrastructure Leasing & Financial Services Ltd (IL&FS) and are likely to submit their expression of interest to participate in the bidding process, said two sources close to the development.
While the board of IL&FS, led by Uday Kotak, had on Wednesday initiated the process of exploring the sale of controlling stake in its renewable energy assets, some of the key players that have shown interest include — Atria Power, ReNew Power, Adani Power and Hero Power among others confirmed the sources. It is learnt that two large PE players — Brookfield and KKR — have shown interest.
Sources say that IL&FS may raise around Rs 8,000 crore to Rs 9,000 crore from sale of renewable energy assets. It had earlier valued wind power assets at around Rs 5000 crore. IL&FS had earlier said that interest has been received from a mix of banks, private equity firms and other financial services companies.
“Qualifying interested bidders will then be invited to review information on the business that would be shared with them, so as to enable them to submit commercial bids,” it said.
The assets where IL&FS is looking to sell its controlling stake include operating wind power generating plants with aggregate capacity of 873.5 MW, under-construction wind power generating plants with aggregate capacity of 104 MW, asset management services for the operating wind power generating plants as well as the business division conducting project development and implementation of wind power generating plants.
Besides, the troubled infra major has also planned to put on block businesses relating to project development and implementation of solar power generating plants and projects under development of approximately 300 MW capacity solar power plants for corporates.
With several large players showing interest in the energy assets, IL&FS is hopeful that it will be able to monetise the assets well. While the company has debt liabilities of over Rs 94,000 crore, it has already received good response for IL&FS Securities and ISSL Settlement & Transaction Services and is now in the process of monetising more assets.
Sale of these renewable energy projects will be key to the revival of IL&FS, and to the success of future asset sales. Assets put on sale include 977.5 MW of wind power projects and 300 MW of solar power projects, which are in various stages of development. Wind projects are spread across states of Rajasthan, Gujarat, Maharashtra, Tamil Nadu, Karnataka, Madhya Pradesh and Andhra Pradesh.
The PPAs (power purchase agreements) are in place for almost entire capacity with the respective state Discoms and is based on long-term feed-in tariff mechanism as well as the renewable energy certificate route.
The company had earlier said that the proposed sale of stakes held by the IL&FS group in the assets may be carried out as a basket, individually or in any combination thereof.
Accordingly, the board has decided to publicly solicit expressions of interest to assess the interest for a sale of its stake in the renewable energy assets.
IL&FS board is likely to put some of the infrastructure projects on the block in the coming days as the group has an exposure of about Rs 53,000 to banks alone.
The IL&FS group is expected to launch the asset monetisation process for sale of many other assets as part of its ongoing resolution process. It had appointed Arpwood Capital Pvt Ltd and JM Financial Ltd as financial & transaction advisors, while Alvarez & Marsal as resolution consultants.
Explained: Board identifies assets which have market’s interest
The new IL&FS board under the chairmanship of Uday Kotak has been actively working out solutions to reduce its debt obligations amounting to over Rs 94,000 crore.
In a quick time, the board has been able to identify various assets that have witnessed interest from the market and thus raise hopes on their monetisation. While monetisation of these renewable energy assets are expected to raise around Rs 8,000 crore for IL&FS interest from big power players and PE players followed by successful stake sale would be critical in turning market sentiment around the company and would help in monetisation of other assets in future.