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Sembcorp acquires GIP-backed Vector Green Energy in India for $345 million

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Mohit Kaul's picture
Founder Enerdatics

Building Enerdatics. Leadership experience in a high growth SaaS company and secured a successful exit. A natural leader who cares about creating value for all stakeholders. Extensive experience...

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  • Nov 15, 2022
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Vector Green Energy was established in 2017 by Global Infrastructure Partners (GIP). The company’s portfolio includes more than 652 MW of solar PV and wind assets spread across thirteen Indian states. The company also has ~1 GW of investment-ready solar projects and ~1.2 GW of solar projects in the pipeline.

As per Enerdatic’s research, the transaction involves the acquisition of 12 Special Purpose Vehicles (SPVs) totaling 583 MW of operational capacity. Power from rooftop projects is sold to commercial and industrial customers, while the rest is contracted under 25-year power purchase agreements (PPAs) with public utilities such as Solar Energy Corporation of India (SECI), National Thermal Power Corporation (NTPC), and Adani Energy. 

The buildout of Vector Green’s development pipeline is expected to be financed by the company’s debt issuances from last year. In Jun of ’21, the company issued $169.84 million of green bonds to pay off long-term debt and fund expansions. Later in October 2021, Vector Green secured a $185 million loan from the Indian Renewable Energy Development Agency (IREDA), marking IREDA’s highest disbursement to a single company in one day. Sembcorp has been in negotiations to acquire Vector Green since Apr’22, reportedly competing with companies such as JSW Energy, Torrent Power, and Apraava Energy reported to be part of the race to acquire Vector. The company was evaluated to have an equity value of $377 million and an enterprise value (EV) of $630 million. 

The activity in the Indian renewable energy sector almost doubled year-on-year so far in 2022, driven primarily by large, industrial conglomerates and private equity (PE firms). Earlier this year, UAE-based International Holding Company invested in Adani Green Energy and its 25 GW portfolio, which comprises more than 5 GW of operational projects and nearly 20 GW of under-development assets. US-based PE firm KKR also recently made two major investments in the country, partnering with Serentica Renewables and Hero Future Energies.

The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation. 

Discussions
Kshitij NR's picture
Kshitij NR on Nov 16, 2022

Interestingly, Global Infrastructure Partners started exploring the sale of Vector Green Energy Private Limited in Oct'21, and was in discussions with bankers including Rothschild & CoStandard Chartered Bank and J.P. Morgan.

Hari Krishnan V S's picture
Hari Krishnan V S on Nov 16, 2022

The acquisition of Vector Green Energy Private Limited will give Sembcorp 519 MW of operational assets, which will give them stable revenue as well as ~1 GW of investment-ready solar projects and ~1.2 GW of solar projects in the pipeline, which will give them great room for expansion in the renewable sector in India.

Sanskruti  Rajore's picture
Sanskruti Rajore on Nov 17, 2022

India ranks fourth in renewable energy capacity and fifth in solar power capacity. The sector received Foreign direct investments (FDIs) inflow of $11.62 billion between April 2000-March 2022. The UAE government has committed to invest $75 billion in sovereign funds in India and the two partners have shared a vision for clean energy as they are working together to start manufacturing equipment for solar power. In the Union Budget 2022-23, the Indian government also allocated $2.57 billion for a PLI scheme to boost the manufacturing of high-efficiency solar modules. Thus rising foreign investment is expected to promote further investments in the country.

Mohit Kaul's picture
Thank Mohit for the Post!
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