Greenko raises $155 mn to fund capacity expansion

Funding raised from affiliates of GIC and Abu Dhabi Investment Authority

Hyderabad-based clean energy major Greenko Energy Holdings has announced the signing of definitive agreements for a primary equity raising of $155 million (about Rs 1,007.5 crore at today's exchange rate) from an affiliate of Singapore Sovereign Wealth Fund, GIC. and an affiliate of Abu Dhabi Investment Authority (ADIA).

The GIC, which is the majority shareholder of Greenko, is investing $123.9 million while the ADIA subsidiary will be investing the remaining $31.1 million, according to the company.

'These funds will help us to achieve the target of 3 giga-watt (3,000 mw) installed capacity by December, 2017 from the current 2.5 gw level," Mahesh Kolli, president and joint managing director of Greenko told Business Standard on Monday.

After the last year acquisition of the US company Sun Edison's solar assets and a 100-mw hydro electric project in Himachal Pradesh from Abu Dhabi National Energy Company PJSC (TAQA), the Indian renewable energy company is raising this fresh equity to fund the organic expansion.

The company claims that the transaction demonstrates Greenko's continued ability to attract long-term infrastructure capital and commitment from the existing shareholders on business.

The latest round will take the total equity investment to $1 billion by the 10-year old company, which owns and operates clean energy projects across 9 states in the country. Post this event, Greenko promoters- Mahesh Kolli and the group chief executive officer Anil Kumar Chalamalasetty- together will hold 25 percent stake in the company while the rest is held by GIC and other investors.

Talking about the company's targets in terms of capacity addition beyond 2017, achieving 5 GW installed capacity by 2019, Mahesh Kolli said the fall in wind and solar tariffs will have little impact on their long term plans. "The recent fall in tariffs has been a function of a combination of factors involving the advancement in technology and rise in efficiency levels, which is a global phenomenon, whereas our strategy is based on a long term sustainable model through investments in the grid parity power projects with a balanced mix of portfolio," Greenko joint managing director said.

The company has already achieved a scale to be able to stay focused and also generate resources to fund the expansion largely internally, according to him. "The company's balance sheet will be $4 billion this year with an EBITDA of $500 million. We will not raise any more equity to fund our organic expansion plans from here. We will do it only if there is a fresh acquisition to look at," Mahesh Kolli said.

According to Mahesh, Greenko will try to ensure a balance in portfolio mix at around 40 percent of wind energy, 30-35 percent of solar and 20-25 percent of small hydro projects to keep a healthy balance sheet going forward.