The Economic Times daily newspaper is available online now.

    Brookfield bets big on Greenko, looks to invest $1 billion

    Synopsis

    The investment could even go up to $1.25 billion at a potential $9-10 billion valuation and may either be in parent Greenko Energy Holdings or subsidiary Greenko Zero C. Partnership with Brookfield, a long-term owner, operator and developer of infra assets, will help in decarbonising initiatives that both sides have launched.

    BrookefieldAgencies
    Brookfield Asset Management is in active discussions with Greenko to invest at least $1 billion in the company as the Hyderabad-based clean energy firm doubles down on providing energy solutions, said people aware of the matter. The partnership with Brookfield, a long-term owner, operator and developer of infra assets, will help in decarbonising initiatives that both sides have launched. Greenko’s initiatives include pumped hydro storage infrastructure, green hydrogen for industrial usage and ammonia as well as a cloud-based intelligent energy platform.

    The investment could even go up to $1.25 billion at a potential $9-10 billion valuation and may either be in parent Greenko Energy Holdings (GEH) or subsidiary Greenko Zero C, said the people cited above. That will make Greenko the second-highest valued renewables company after Adani Green Energy Ltd.

    Greenko Energy Holdings (GEH) has GIC of Singapore as majority shareholder. Orix Corp. of Japan and Abu Dhabi Investment Authority are the other shareholders along with the two founders, Anil Kumar Chalamalasetty and Mahesh Kolli. In 2020, Orix purchased a 21.8% stake in Greenko for about $961 million at a $6 billion valuation.

    Greenko Zero C is a step-down subsidiary in which Greenko Energy Holdings has a 70% stake while the two founders own a 30% share. It was set up for various green hydrogen and energy transition initiatives.

    Earlier this year, Brookfield announced it had raised a record $15 billion for its inaugural Global Transition Fund. This makes it the world's largest private fund dedicated to the net zero transition, signalling that investors are still committed to establishing cleaner portfolios. Brookfield is the single largest sponsor of the fund, having deployed $2 billion. The investment is likely from this fund.


    Page 1 (Brookefield)ET Online

    Greenko and Brookfield spokespersons declined to comment.

    Greenko’s existing investors have also agreed to pump in about $1 billion through a rights issue to bankroll its expansion. The Brookfield investment, once approved, will provide long-term growth capital as the company is investing in several mega pumped storage projects in Andhra Pradesh and Rajasthan. There are also plans to invest in green hydrogen and green ammonia units on the east coast. The company’s development pipeline includes nearly 100 GWh of pumped hydro storage projects enabling round-the-clock renewable energy (RE RTC) and a pioneering foray into the green molecules business including a gigawatt capacity electrolyser facility in India.

    In April, Belgium’s John Cockerill and Greenko Zero C finalised the terms of a 50:50 joint venture to set up two akaline electrolyser factories of a gigawatt each in India over the next 12 to 18 months to make the lowest cost hydrogen in the country for industrial users. The facility, likely to come up on the east coast with a planned $500 million investment, will be the biggest till date outside China.

    Greenko plans to use its 50GW/hr pumped hydro energy storage capacity coming up in Andhra Pradesh to provide reliable 24x7 green power and overcome the intermittent nature of wind and solar power generation. The factories will supply electrolysers to Greenko’s green ammonia plant and to other green hydrogen facilities of industrial users such as refineries or chemical complexes. The plants will include the full manufacturing electrolyser value chain, including state-of-the-art nickel coating and will produce electrolysers delivering H2 at 30 bars at the outlet at the highest purity level, the firms said in their joint statement.

    Subsequently, ONGC, Posco, Hindalco all signed MoUs for green hydrogen with Greenko Zero C. As an independent power producer (IPP) since 2004, Greenko’s current portfolio is 7.5 gigawatts of operating capacity in 15 states in India across solar, wind and hydro power projects.

    As per Fitch Ratings calculations, capex on storage projects will continue. The first project will start operations in FY25 with a total outlay of around $1 billion for each project, it said. Around $900 million of capex is for the 1.6GW of solar capacity associated with the Andhra Pradesh storage project. The company had a readily available cash balance of $485 million at end-September 2021, against current debt maturities of $636 million, including working-capital loans of $95 million.

    However, analysts point to concerns about the deteriorating receivables position, due mainly to delayed payments from state-owned distribution companies. In Andhra Pradesh, because of a tariff dispute, GEH's trade receivables grew to $771 million in September 2021 from $566 million in March 2021, as per Moody’s calculations.

    “GEH's rating reflects its diverse portfolio of operating renewable energy assets backed by long-term contracts, track record and large operating scale. However, GEH's exposure to financially weak offtakers and large capital spending plans, which will keep its financial leverage high, offset these strengths,” said an official. “There is a conscious pivot to move from generation to being an energy solutions provider with a technology stack added. The reliance on industrial users also offsets the payment risks from discoms that are perennially in financial duress.”

    Brookfield is looking to multiply its current 4 GW India renewables portfolio by three to four times within the next decade in generation as well as helping corporates make the transition to decarbonise and invest in building large scale supply chain in the country, Connor Teskey, managing partner, CEO, renewable power and transition, told ET in a recent interview. By looking to be a decarbonising partner of scale, Brookfield is looking at several ways to engage with corporates in metals and mining, auto, chemicals, manufacturing, all large emitters of carbon.


    (You can now subscribe to our Economic Times WhatsApp channel)
    (Catch all the Business News, Breaking News Budget 2024 News, Budget 2024 Live Coverage, Events and Latest News Updates on The Economic Times.)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    ...more
    The Economic Times

    Stories you might be interested in