What’s happening to India’s renewable energy rush, when the world’s largest firm in the area is selling out its Indian assets?
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The sale would be managed by Goldman Sachs, as SunEdison Inc looks to cut some costs and trim its global portfolio after expanding at a frenzied pace. If reports are to be believed, in less than a year, it had global mergers and acquisitions (M&As) of over $6 billion.
For the monetisation, preliminary feelers have been sent to several global and local renewable energy companies and private equity funds that are focused on green energy. For its assets, SunEdison is expecting a total valuation of $500-600 million.
The news has come soon after the company stepped out from buying Continuum Wind. The Continuum buyout, which was announced in June and cancelled earlier this month, would have been its boldest bet in India. It would also have been the largest clean tech M&A to happen in the country. Although there never was an official announcement about the value of the deal, it was estimated to be Rs 3,700-3,900 crore.
The reason for the global distress is its inability to raise the amount of money as it had expected to by listing TerraForm Global in Nasdaq this July. TerraForm Global, which was established as a yieldco to acquire renewable energy assets in emerging markets, was able to raise only $675 million. This was done by selling 45 million shares at $15 a share in its initial public offering (IPO); the reduced number of shares was priced below the original range of $19-21 a share. This shortfall was the reason behind a crash in its share, driving back the acquisition plans that were to be done with this money.
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"They have made significant commitments to acquire assets globally. That has increased their credit risk and with the IPO bombing, they need to unlock some value for their investors in the US. Their equity shares have bottomed out, their bond prices have shot up. They are already having a hard second look at their existing portfolio and cutting losses," said an analyst tracking developments.
However, some sources that are involved reportedly said that the company does not want to sell its India portfolio as distressed assets and in turn is looking forward to a significant premium.
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