SunEdison Inc., which has filed for bankruptcy protection in the U.S., is looking to sell a sizeable minority stake in its Indian projects, a top company official said.
Mr. Pashupathy Gopalan, President of SunEdison Asia Pacific, told The Hindu over phone from the U.S. that there could be equity dilution of up to 49 per cent over the next two to three months.
The renewable energy company is in serious talks to rope in equity partners for about 1.7 gigawatts of projects planned in India.
Goldman Sachs-backed ReNew Power, the homegrown renewables start-up, is one of the potential investors in talks with Sun Edison to buy some of its solar assets in India. Sumant Sinha, promoter-CEO and Chairman of ReNew Power, had recently told The Hindu that a lot of churn was happening in the industry. His company had the capital and was willing to buy assets, if it found the price attractive.
Responding to a question on whether the bankruptcy protection petition would hurt valuations during the equity dilution process, Mr. Gopalan said there was tremendous interest in renewable energy among investors. SunEdison, he said, had initiated discussions with several categories of existing investors.
He also said the bankruptcy protection process pertained to certain entities of the company in the U.S. It did not, however, include the Indian operations and hence would not affect the business in the sub-continent.
According to Mr. Gopalan, SunEdison currently has about 700 megawatts of operating assets and 1.7 gigawatts of capacity under development in India.
Mr. Raj Prabhu, Chief Executive Officer, Mercom Capital Group, a clean energy-focussed communications and research firm, said “this (bankruptcy petition) will generally be a big wake up call for solar companies loaded with debt.
“They (SunEdison) are likely to offload their projects considering their financial situation or these projects may get cancelled and re-auctioned.
“Either way, in the big scheme of things, this is not going to be a huge deal. That said, company financials, especially when bidding for large projects or at very low tariffs, may come under more scrutiny,’’ Mr. Prabhu said.
According to Ms. Jenny Chase, Head of Solar Insight Service at Bloomberg New Energy Finance, there is plenty of value in the project pipeline which ultimately comprises cash-generating assets not linked to the continued existence of SunEdison.
“However, investors will take time to do the due diligence to value these projects correctly before handing over cash for them. Some projects, like the portfolio in Andhra Pradesh, at the lowest-ever tariff of Rs. 4.63/kWh ($70/MWh), may be difficult to build at a profit due to the extremely competitive prices they were bid at,’’ she said in a statement.
