Japan's ORIX Corp offers to match GAIL's bid for IL&FS Wind Energy

GAIL’s ambition to expand its renewable portfolio through Il&FS’ wind portfolio faces a new hurdle. ORIX Corporation of Japan (ORIX) has now expressed its intent to exercise its right to buy out the remaining stake in IL&FS Wind Energy.

ORIX owns 49 per cent stake in IL&FS’ wind portfolio, and GAIL has emerged the highest bidder for the remaining 51 per cent stake in these assets, which are held by the IL&FS group.

“ORIX has expressed its intent to buy out the remaining 51 per cent stake held by IL&FS Wind Energy,” an IL&FS group statement said on Sunday. The statement added: “This intent to buy 51 per cent stake is in exercise of ORIX’s right under the terms of an existing Memorandum of understanding (MoU) wherein ORIX can match the price offered by the highest bidder for purchasing IL&FS Wind Energy’s stake in the wind special purpose vehicles (SPVs).”

IL&FS Group, in its statement, added that this development is a key step in the resolution process of IL&FS Group, being undertaken by the new board of IL&FS. While ORIX’s intent is a positive development for IL&FS, it will be a setback for GAIL’s renewable strategy.

In April, at the end of the binding bid stage under a publicly conducted sale process, GAIL had emerged the highest bidder for the seven SPVs, with total generation capacity of 874 Mw. “GAIL’s offer of approximately Rs 4,800 crore for 100 per cent of the enterprise value contemplated no haircut to the debt of SPVs, aggregating Rs 3,700 crore,” according to the IL&FS statement. ORIX needs to match this offer.

GAIL has been trying to expand its presence in renewable energy like solar and wind. In March, it entered into an MoU with Bharat Heavy Electricals (BHEL) for cooperation in development of solar-based projects.

The MoU is expected to help GAIL pursue bidding for commercial solar power projects. At present, GAIL has total installed capacity of 128.71 Mw of renewable energy, of which 117.95 Mw is in wind and 10.76 Mw in solar. 

The state-owned company also operates India’s second-largest rooftop solar photovoltaic power plant at its petrochemical complex at Pata (Uttar Pradesh).

IL&FS, in its statement, added: “The completion of sale to ORIX will be subject to satisfaction of all compliances and approvals required under applicable laws — including approval of Justice (Retd) D K Jain and National Company Law Tribunal (NCLT), in accordance with the proposed Resolution Framework.”