Qatar fund buys 2.7% stake in Adani Green for Rs 3,920 cr via block deals

This investment comes hot on the heels of reports that the same fund is considering the acquisition of a one per cent stake in Reliance Retail Venture

The West Asian-based sovereign investment fund, Qatar Investment Authority, acquired a 2.7 per cent stake in Adani Green Energy (AGEL) for Rs 3,920 crore via block deals on Monday. Banking sources state that the proceeds will be used by the group to reduce its debt and for other general corporate purposes.

The investment by the Qatar sovereign fund is a significant vote of confidence in the company, which boasts an operational capacity of 8,316 megawatt (Mw), making it the largest operating renewable energy portfolio in the country.

AGEL shares closed 4.69 per cent down at Rs. 965 per share, resulting in a total valuation of Rs. 1.53 trillion for the company. Before the transaction, the promoters owned a 56.27 per cent stake, which has now been diluted by 2.7 per cent.

The sovereign fund’s investment comes shortly after reports that the fund is looking to acquire a 1 per cent stake in Reliance Retail Ventures for $1 billion, thus valuing the Reliance group company at $100 billion.

The Adani group aims to invest $70 billion by 2030 in the renewable energy sector, which is already attracting investments from sovereign funds worldwide. The company’s solar-wind hybrid portfolio of 2,140 Mw is supported by new plants with technologically advanced solar modules, including bifacial modules and horizontal single-axis trackers, as well as wind turbines, high plant and grid availability, and improved solar irradiation.

The company plans to increase its renewable energy capacity to 45 gigawatt (Gw) within seven years, up from the current operational capacity of 8.3 Gw.

According to a source, AGEL had a net debt of Rs. 40,000 crore as of March this year and can generate significant cash through internal accruals for investments in new projects and debt reduction. The company also plans a qualified institutional placement that would help fund the ongoing projects, for which it has already acquired 200,000 acres of land, and expects to commission another 3 Gw of projects in 2023-24, having identified land in Gujarat and Rajasthan.

AGEL has already attracted investments from sovereign wealth funds at the holding-company level and also in specific projects. Investments in green energy are rising for sovereign funds across the world, and they would be interested in investing in the company when the share sale is launched, said an investment banking source.

The company has $1.64 billion in construction facilities to ensure fully funded growth. It also has diversified sources of funding with elongated maturities of up to 20 years, according to a statement to the stock exchanges recently.

Why is QIA betting on AGEL?

• AGEL targets 45 GW capacity by 2030
• Operational Capacity increases by 43% to 8,316 MW YoY as of July end
• Solar portfolio capacity utilisation at 26.9% 
• Wind portfolio capacity utilisation at 38.7% 
• Overall Hybrid portfolio capacity utilisation stands at a strong 47.2% 
• Sale of Energy increases by 70% YoY at 6,023 mn units in Q1 FY24 vs. 3,550 mn units in Q1 FY23