Energy giant Shell Plc on Friday agreed to buy Sprng Energy, the Indian renewable energy platform of Actis Llp, for an enterprise value of $1.55 billion, expanding its footprint in the country. which is navigating a massive energy transition.
Sprng Energy has 2.1 gigawatts (GW) of operational renewable energy projects and 7.5 GW in the pipeline. Once the transaction is completed, Sprng Energy will operate as a wholly owned subsidiary of Shell.
“Shell Overseas Investment BV, a wholly owned subsidiary of Shell Plc, today signed an agreement with Actis Solenergi Ltd (Actis) to acquire 100% of Solenergi Power Pvt. Ltd for $1.55 billion, and with it the Sprng Energy group of companies,” Shell said in a statement. Mauritius-based Solenergi Power is the direct owner of the Sprng Energy group of companies in India.
“Actis, a leading global investor in sustainable infrastructure, has agreed to sell Solenergi Power Pvt. Ltd, the flagship company of its Sprng Energy platforms,” Actis said in a separate statement.
Mint announced on February 24 that Shell was among the first to acquire Sprng Energy.
Shell’s acquisition of Sprng Energy comes at a time when India is executing ambitious plans to meet 50% of its energy needs from renewables by 2030 and increase power generation capacity from of non-fossil fuels to 500 GW by then.
The transaction is subject to regulatory approvals and is expected to close later in 2022. The sale of Sprng follows Actis’ sale of Ostro Energy Pvt. Ltd to ReNew Power Ventures in 2018 for an enterprise value of $1.5 billion.
Five entities – Shell, the Canada Pension Plan Investment Board (CPPIB), Sembcorp Industries Ltd of Singapore, ArcelorMittal and Adani Group – had carried out due diligence on Sprng Energy after the first stage of the process which saw non-binding offers from 17 entities. Others who had signed non-disclosure agreements (NDAs) for the transaction include BlackRock Inc., JSW Group, Brookfield Asset Management Inc., KKR, Macquarie Group, CDPQ, Municipal Employees Retirement Plan Ontario (OMERS) and the Ontario Teachers’ Pension Plan. Bank of America led the sale process for Actis.
“I believe this will enable Shell to become a leader across the electricity value chain in a rapidly growing market where large-scale electrification and strong demand for renewables are driving the energy transition. “Wael Sawan, Shell’s director for integrated gas, renewables and energy solutions, said in the statement.
“Sprng Energy’s strengths can combine with Shell India’s thriving customer-facing gas and downstream businesses to create even more growth opportunities,” Sawan added.
Shell already operates a liquefied natural gas (LNG) terminal in Hazira, Gujarat on India’s west coast, and is among the few foreign oil companies to hold a fuel retail license in the country. It plans to start a gas-fired power generation and storage business in India and has invested in Husk Power Systems and Cleantech Solar Pte Ltd. Shell had created its New Energies division in 2016.
“We remain committed to the Indian market and its green transition, and hope to deploy an additional $1 billion in the region by the end of 2026,” said Sanjiv Aggarwal, partner, energy infrastructure at Actis.
Actis plans to invest $850 million in India to build two green energy platforms, Mint reported earlier. The first platform will focus on setting up grid-connected solar and wind farms, while the second will address the growing commercial and industrial (C&I) segment. Actis, which invests only in emerging markets, has so far committed $2.1 billion to the Indian market, spanning the energy, financial services and real estate sectors.
“We look forward to creating more Sprngs with our latest fund, Actis Energy 5,” Lucy Heintz, Partner, Head of Energy Infrastructure at Actis, added in the Actis statement.
Lured by the potential of India’s green economy, big deals are back. Recently, a consortium led by the world’s largest asset manager, BlackRock, and UAE sovereign wealth fund Mubadala Investment Co., agreed to invest ₹4,000 crore for 10.53% Tata Power Renewables.