Singapore's Sembcorp Utilities, a wholly-owned subsidiary of Sembcorp Industries, has agreed to pick up a controlling stake in Green Infra, a wind generation firm controlled by IDFC 's PE arm. Sembcorp will invest Rs 1,051 crore for 60 percent stake in Green Infra, which is valued at Rs 4,400 crore.
In an interview to CNBC-TV18, Girish Nadkarni, Partner, IDFC Alternatives, said there has been a pick up in private equity investments in the past 6 months with a push for renewable sector in the last 8-9 months. He expects lower capital costs, interest rates to help pick-up in activity.
Private equity activities are seeing more inbound investment than outbound and there has been major interest seen in wind, hydro power and solar sectors, Nadkarni said, adding that the company has done 64 investments and exited around 31. The company will focus on core infra going forward, he said.
According to Tang Kin Fei, Group President & CEO, Sembcorp Industries, energy demand is growing very rapidly in India with renewable energy becoming a sustainable business. Sembcorp already has 4 units in India with 3,000 mw power generation capacity. We are creating a base for more investment in here, he said.
Below is the transcript of Girish Nadkarni and Tang Kin Fei's interview with Ekta Batra & Anuj Singhal on CNBC-TV18.
Ekta: Could you throw some more light on the deal as a whole?
Nadkarni: Green Infra is a company which is incorporated and incubated by IDFC and today we own 100 percent in this company. Today this company has 516 mw of capacity and soon it will touch 700 mw capacities. The current transaction is we are partnering with Sembcorp. Sembcorp is taking the controlling stake in this company. They will have 60 percent in this company. Our fund too will exist and we will continue in this company as a minority shareholder with 40 percent.
Anuj: How do you look at this deal in terms of valuations and returns?
Fei: In terms of valuation of Green Infra Limited, it is based on the current plans that they have and also the pipeline of the potential investment they have in India.
Ekta: What are the opportunities that you see in India in the renewable energy space given the government's possible focus on it?
Fei: India is a big country and is growing very rapidly in terms of energy demand. The current energy usage per capita is still very low. In the years to come we would expect more and more requirements of energy for the population and as the generation or power requirement in India grows, will increase in thermal power requirements and to balance the carbon emission from thermal power generation. I think every government will be concerned and every government will be supportive to have renewable energy to balance the carbon emission in the country. Therefore, we think that renewable energy in India will be a sustainable business.
IDFC stock price
On February 13, 2015, at 14:15 hrs IDFC was quoting at Rs 174.05, up Rs 1.95, or 1.13 percent. The 52-week high of the share was Rs 179.20 and the 52-week low was Rs 93.10.
The company's trailing 12-month (TTM) EPS was at Rs 9.64 per share as per the quarter ended December 2014. The stock's price-to-earnings (P/E) ratio was 18.05. The latest book value of the company is Rs 92.92 per share. At current value, the price-to-book value of the company is 1.87.
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