Greenko founders eye fresh deal to acquire Orix's stake despite pullout

By Megawati Wijaya and Saikat Das

 

The founders of Indian clean energy producer Greenko Energy Holdings are still working on purchasing Orix Corp.’s stake in the company, despite the Japanese financial group’s announcement cancelling the sale, said people familiar with the matter.

 

Anil Chalamalasetty and Mahesh Kolli, co-founders of Greenko, are tweaking the deal structure to pave the way for the acquisition to proceed, said the people who declined to be named discussing confidential matters. Singapore’s sovereign wealth fund GIC Pte. is the largest owner of Greenko with a 58 per cent stake, according to Bloomberg Intelligence.

 

Under the original terms of the proposed $1.46 billion purchase of Orix’s 20 per cent stake, Greenko’s founders planned to finance half of it in cash, with the remainder to be funded via subscribing to convertible bonds issued by AM Green (Luxembourg), a company owned by the founders. 

 

Under the new structure, Greenko’s founders may use less cash and more investment in the convertible notes to fund the acquisition, said the people, adding that the terms remain negotiable and may change. Given the expectations for the lower cash portion, the size of a private loan backing the deal has dropped to around $600 million from $800 million originally, they said. 

 

Even at the smaller amount, the loan will likely remain one of the largest private credit deals in India this year, where direct lending has boomed as Prime Minister Narendra Modi’s infrastructure push increases funding demand for everything from solar power to roads. 

 

The credit support also provides some stability for Greenko as the firm grapples with the recent purchase of a damaged hydro project and an ownership review by GIC, as India’s renewable energy sector digests the fallout from US bribery allegations into solar projects.

 

The original loan received commitments from Keppel Credit, SeaTown Holdings International, BlackRock Inc., Ares Management Corp., and Nomura Holdings Inc. The lenders remain committed to the deal, said the people, adding that the facility also got an additional commitment from Sumitomo Mitsui Banking Corp. 

 

AM Green, Greenko, Orix, SeaTown, Ares, Nomura and SMBC declined to comment, while BlackRock and Keppel Credit did not immediately respond to such requests.

 

Orix said last month it has terminated its agreement to sell its Greenko stake to the latter’s founders as “conditions precedent have not been satisfied.” It added that the buyers had failed to agree with funding partners over financing of the transaction.