Sembcorp acquires 100% stake in GIP-backed Vector Green for Rs 2,780 cr

Vector has a total portfolio of 583 Mw across 13 states; deal will take Sembcorp's gross renewable assets in India to 3 Gw

Singapore-listed utility company Sembcorp Industries on Sunday said it will acquire clean energy platform Vector Green Energy for Rs 2,780 crore to expand its renewable energy footprint in India to 3 gigawatts (Gw).

The portfolio includes 495 megawatt (MW) of solar capacity and 24MW of wind capacity in operation, with 64MW of solar projects under development. With this cquisition, Sembcorp’s gross renewables portfolio installed and under development in India will touch 3 gigawatt (GW), comprising 1GW of solar assets and 2GW of wind assets, said the company.

Sembcorp said the acquisition will be funded through internal cash resources and external borrowings.

Wong Kim Yin, Group President & Chief Executive Officer (CEO), Sembcorp Industries, said with the completion of this acquisition, Sembcorp's gross renewable energy capacity will increase to 8.5GW, pushing it closer towards their 2025 target of reaching 10GW.

The acquisition complements Sembcorp’s existing portfolio, which comprises 90 per cent of wind energy projects. A solar-heavy portfolio of Vector Green Energy will balance it and increase Sembcorp’s spread from 7 states in India to 13 states.

With as much as 90 per cent of operational capacity, Vector Green Energy provides a portfolio that will contribute to cash flows immediately. Vector Green Energy has a 19-year weighted average remaining life of pacts to sell power. It has signed power purchase agreements for all but 24 Mw or 4 per cent of the portfolio.

Vipul Tuli, CEO of South Asia, Sembcorp Industries, said: “This acquisition brings the significant utility-scale solar capacity to our India business, which will complement our existing wind portfolio. It also broadens and deepens our renewable energy capabilities and presence across states in India, and positions us well for further green growth in the country.”

With this acquisition, Sembcorp will now have a portfolio of 8.7 Gw, comprising 6.7 Gw operational and the rest under development.

Tuli said, including Vector Green, Sembcorp’s gross renewables portfolio installed and under development in India will total 3 Gw, comprising 1 Gw of solar assets and 2Gw of wind assets.

“Sembcorp Industries (Sembcorp) announces that its wholly-owned subsidiary, Sembcorp Green Infra Limited, has signed an agreement with India Infrastructure Fund II, a fund managed by Global Infrastructure Partners India Pvt Ltd, to acquire 100 per cent interest in Vector Green Energy Private Limited (Vector Green) for a base equity consideration of approximately Rs 2,780 crore,” it said in the statement.

The acquisition will be funded through internal cash resources and external borrowings. The completion of the acquisition is subject to customary closing conditions and is expected by the first quarter of 2023. Besides Sembcorp, electricity producer Torrent Power too was interested in Vector Green Energy. But, the Singapore utility won the race.

India is seeing a spurt in investments in the renewable sector as it targets to cut 1 billion tonnes of carbon emissions by the end of this decade and reach net-zero by 2070.

Prime Minister Narendra Modi's government has also pledged to cut emissions by 45 per cent from 2005 levels and use non-fossil fuel sources to power half its installed generation capacity by 2030.