In its first-ever asset sale, New Delhi-based Azure Power Global has agreed to sell its solar rooftop portfolio to distributed renewable energy platform Radiance Renewables for INR 536.5 crore (US$ 73.5 million). The deal for the asset sale was announced by the two players yesterday.
Radiance Renewables is a wholly-owned subsidiary of the UK-India Green Growth Equity Fund (GGEF), managed by EverSource Capital, and is focused on serving corporate, commercial, industrial, and residential customers.
As per the agreement, Radiance Renewables will acquire solar rooftop assets aggregating to 152.5 MW, including 8.1 MW of under-construction and 18.5 MW of newly commissioned assets.
Azure Power expects the transaction to improve its run rate Cash Flow to Equity (CFe) and reduce general and administrative (G&A) expenses.
The company’s rooftop portfolio generated INR 33.1 crore (US$ 4.5 million) in EBITDA for the January-December period of the year 2020. After excluding rooftop revenues, it estimates its FY2021-22 revenue to be INR 1720-1820 crore (or US$ 236 – $249 million). Besides, the company now expects its general and administrative expenses (excluding stock compensation expenses and transaction costs) to reduce to US$ 20 million from the previous estimate of US$ 22 million inclusive of the rooftop portfolio.
Azure expects to take an estimated INR 290-440 crore (US$ 40 – $60 million) one-time charge subject to purchase price adjustments and other conditions related to this sale.
Proceeds are expected to be received before December 31, 2021.
KPMG was the financial advisor, and Trilegal was counsel to Azure Power on this transaction.
Speaking on this occasion, Ranjit Gupta, Chief Executive Officer, Azure Power said, “This sale, the first-ever asset sale in Azure Power’s history, illustrates the company’s commitment to capital discipline. The sale of this non-strategic portfolio allows us to enhance returns on invested capital through efficiency gains and cost optimisation whilst recycling capital into higher return, committed projects. Our focus is on creation of shareholder value.”
On the other hand, this strategic acquisition will position Radiance as a significant pan India player in the Commercial, Industrial and Institutional segments with exposure to long-term power purchase agreements with quality customers.
“This transaction allows Radiance to bring its high-quality asset management skills to improve asset performance given its focus on enhancing and delivering value to its stakeholders. We plan to introduce cutting-edge asset management tools such as real-time monitoring with analytics and aim to make Radiance a leading Renewable Energy as a Service (REaaS) player in India,” said Manikkan Sangameswaran, Executive Director, Radiance Renewables.
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