Sembcorp buys Vector Green Energy for ₹2,780 crore

Singapore-listed utility company Sembcorp Industries on Sunday said it will acquire clean energy platform Vector Green Energy for ₹2,780 crore to expand its renewable energy footprint in India to 3 gigawatts (GW).

Vector Green Energy, owned by funds managed by the Indian subsidiary of Global Infrastructure Partners, has 519 megawatts of operational (495 MW solar and 24 MW wind) and 64 MW of solar projects under development. The firm reportedly also has 1 GW of investment-ready assets in the pipeline.

The completion of the acquisition in the next three months will bring the Singapore-based group's gross renewable energy capacity to 8.5 GW, closer to its 2025 target of 10 GW of gross installed renewable capacity, Sembcorp said in a statement.

The acquisition complements Sembcorp's existing portfolio which comprises 90 per cent of wind energy projects. A solar heavy portfolio of Vector Green Energy will balance it and increase Sembcorp's spread from 7 states in India to 13 States.

Also, with as much as 90 per cent of operational capacity, Vector Green Energy provides a portfolio that will contribute to cash flows immediately.

Vector Green Energy has a 19-year weighted average remaining life of pacts to sell power. It has signed power purchase agreements for all but 24 MW or 4 per cent of the portfolio.

Vipul Tuli, CEO of South Asia, Sembcorp Industries, said: "This acquisition brings the significant utility-scale solar capacity to our India business, which will complement our existing wind portfolio. It also broadens and deepens our renewable energy capabilities and presence across states in India, and positions us well for further green growth in the country".

With this acquisition, Sembcorp will now have a portfolio of 8.7 GW, comprising 6.7 GW operational and the rest under development.

Tuli said, including Vector Green, Sembcorp's gross renewables portfolio installed and under development in India will total 3 GW, comprising 1 GW of solar assets and 2GW of wind assets.

"Sembcorp Industries (Sembcorp) announces that its wholly-owned subsidiary, Sembcorp Green Infra Limited, has signed an agreement with India Infrastructure Fund II, a fund managed by Global Infrastructure Partners India Pvt Ltd, to acquire 100 per cent interest in Vector Green Energy Private Limited (Vector Green) for a base equity consideration of approximately ₹2,780 crore," it said in the statement.

The acquisition will be funded through internal cash resources and external borrowings.

The completion of the acquisition is subject to customary closing conditions and is expected by the first quarter of 2023.

Besides Sembcorp, electricity producer Torrent Power Ltd too was interested in Vector Green Energy. But, the Singapore utility won the race.

India is seeing a spurt in investments in the renewable sector as it targets to cut 1 billion tonnes of carbon emissions by the end of this decade and reach net-zero by 2070.

Prime Minister Narendra Modi's government has also pledged to cut emissions by 45 per cent from 2005 levels and use non-fossil fuel sources to power half its installed generation capacity by 2030.

Wong Kim Yin, Group President & CEO, Sembcorp Industries, said: "Sembcorp remains committed to growing its renewables portfolio in India, one of the fastest growing renewables markets in the world. This acquisition is aligned with the Group's brown-to-green transformation strategy. With the completion of this acquisition, Sembcorp's gross renewable energy capacity will increase to 8.5 GW, pushing us closer towards our 2025 target of 10 GW".