Due to volatility in the stock market and fluctuating valuations in the renewable energy industry, Singapore's sovereign wealth fund GIC is finding it challenging to sell its 58 percent interest in Greenko Energy.
According to bankers, the company has made offers to sell the interest to a number of parties, including the JSW group, for a price of $4.2 billion.
With a net installed capacity of 11 gigawatts spanning 20 states, Greenko Energy is one of India's top renewable energy providers, according to information on its website.
The JSW Group stated that it was not seeking to purchase any new assets because it was preoccupied with the acquisitions of KSK Energy (for Rs.16,000 crore), O2 Power (for Rs.12,468 crore), and a greenfield 1,600 megawatt power project in Salboni, West Bengal.
GIC listed the stock for sale in October of last year, reportedly for $5 billion. The bankers had contacted it for a sale, according to one of the possible bidders, but the valuation was deemed too high because the stock markets had been declining since September of last year.
Orix Corporation of Japan paid $1.46 billion to the founders of A M Green Power B V for its 20 percent share in Greenko Energy Holdings in January of this year.
In addition to Orix and GIC, the Abu Dhabi Investment Authority holds 14.5 percent of Greenko Energy, while the company's founders possess the remaining shares.
Over thirty years ago, GIC began making investments in India. Over the last five years, the sovereign wealth fund has doubled its exposure, making it one of the biggest investors in the nation. It has $20 billion in exposure to financial services alone. In addition, the fund is involved in telecom, technology, healthcare, real estate, and infrastructure.
In addition, the Japanese banking organization Orix Corp. will sell the interest to AM Green Power BV, which has connections to Greenko's founders, for a loan of $800 million.
Greenko's growth ambitions may also be questionable as a result of the sale. AM Green might not have the financial capacity to support Greenko as well as Orix, which usually depends on equity injections to fund around a quarter of its investments.
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According to the firm, Orix agreed to pay $1.46 billion to Netherlands-based AM Green Power for its 20 percent investment in Greenko. The founders of Greenko founded the business with the goal of concentrating on carbon-free chemicals. With a 58 percent ownership interest, Singapore state investor GIC Pte is Greenko's largest shareholder.