Integrated private power major JSW Energy Limited’s wholly owned subsidiary, JSW Neo Energy Limited, recently agreed to acquire Mytrah Energy (India) Private Limited’s 1.8 GW renewable energy portfolio for a consideration of Rs 105.31 billion. This is the largest acquisition made by JSW Energy since its inception, and will leapfrog its operational capacity by over 35 per cent from 4,784 MW to 6,537 MW. The acquisition of Mytrah Energy fits in with JSW Energy’s focus on achieving its renewable-led capacity growth target of 10 GW by 2024-25, well ahead of time.
Details of the deal
The Mytrah portfolio consists of 10 wind special purpose vehicles (SPVs) with a generation capacity of 1,331 MW, and seven solar SPVs with a generation capacity of 422 MW (487 MWp DC), operating primarily in the southern, western and central parts of India. The assets have a proven operational track record and long-term power purchase agreements (PPAs) with an average remaining life of 18 years.
KPMG India Services LLP served as the transaction adviser to the company, while Khaitan & Co. were the legal advisers and PricewaterhouseCoopers Services LLP carried out financial and tax-related due diligence. The transaction is expected to be completed by November 15, 2022, subject to fulfilment of conditions or precedents set out in the share purchase agreement. The transaction is subject to the approval of the Competition Commission of India and other customary approvals.
Acquisition rationale
The acquisition will accelerate JSW Energy’s renewable-led growth objectives. Post-acquisition, the company’s operational capacity will be enhanced to 9.1 GW (including under-construction projects). JSW Energy has a total installed generation capacity of 4,784 MW, with 3,158 MW of thermal capacity and 1,626 MW of renewable capacity. It also has 2,533 MW of renewable power projects under construction, of which letters of award have been received for 300 MW. Of the total renewable capacity, 85.5 per cent (1,391 MW) is hydro based, while the remaining 14.5 per cent (235 MW) is based on solar. Post the acquisition of the 1,753 MW renewable portfolio from Mytrah Energy, the company’s total generation capacity, including under-development capacity, will be around 9,070 MW, with a renewable capacity of 5,912 MW. The acquisition has increased the share of renewable energy in the company’s portfolio to 65 per cent from the previous 57 per cent. It also supports the company’s near-term target of 10 GW of renewables by 2024-25.
The deal has enhanced the company’s access to resources and technical expertise, helping it achieve its medium-term goal of 20 GW by 2030. Additionally, with the acquisition, cash flow visibility will be high, given the long-term PPAs with an average remaining life of around 18 years and attractive tariffs.
In an official release, Prashant Jain, joint managing director and CEO, JSW Energy, said, “We are excited to acquire Mytrah’s 1.75 GW renewable energy portfolio, which is value-accretive to our shareholders on day one. This landmark deal demonstrates our strong commitment to achieving our vision of 10 GW of capacity by 2025 and being a leading player in India’s energy transition. This acquisition further strengthens and diversifies our operating footprint across various key resource-rich states. We also believe that by leveraging our strong industry, operational and financing expertise, we would be able to significantly improve the operating performance of this entire portfolio, which will ultimately create tremendous value for our shareholders. JSW Energy will continue to look for more such opportunities for value-accretive acquisition to aid its already ambitious growth plans for this sector. This provides a fillip to the company’s growth aspirations and aligns with our renewable-led growth philosophy. Apart from generation, we are also continuing our organic pursuit of storage as well as green hydrogen and its derivatives.”
Conclusion
With an eye on increasing its renewable capacity, the company is aiming to become a significant market player in the renewable energy space. Renewables are expected to play an even larger part in its growth, moving forward. Since JSW Energy is a well-established player in the power sector, it is expected that the company will have an advantage in leaving a greater footprint in the green energy space.
JSW Energy has set an ambitious target of reducing its carbon footprint by 50 per cent by 2030 and achieving carbon neutrality by 2050, by transitioning towards renewable energy. The company aims to reach 20 GW of capacity by 2030, with the share of renewable energy increasing to 85 per cent.