“The Mumbai-headquartered renewable energy firm Avaada Energy, one of India’s largest solar energy producers promoted by serial entrepreneur Vineet Mittal, is looking to raise $200 million-$250 million to expand and also bid for renewable energy assets,” if sources are to be believed.
Investment bank BofA Securities has been given the mandate for the proposed transaction.
Avaada Energy is also backed by the Asian Development Bank and the German development finance institution DEG.
Avaada Energy transaction was likely to see participation from fresh investors and in recent weeks the plan had been to widen the net of potential suitors and focus on long- term investors with “patient capital’’ like sovereign wealth funds and pension funds, a third source said.
“But the crash in oil prices and potential of rising liabilities in home countries due to COVID-19 deaths may impact the investment decisions of such investors,” the source said.
Raising funds in the renewable energy sector depends mainly on the performance of the target company’s underlying assets.
Experts say that due to the nature of long-term contracts ( running into 25 years) and fair visibility of revenues in the sector, investors may still play ball but will have to contend with risks like longer working capital cycles and uncertainty over state power purchase agreements (PPAs).
“Market conditions are tough so deal timelines are bound to get extended.”
Reference- Money Control