After picking up stakes in India’s e-commerce and technology space with investments in Snapdeal, Ola Cabs, and Housing.com, Japan’s SoftBank is set to tap opportunities in the renewable energy sector.
SoftBank today announced a joint venture with Sunil Bharti Mittal’s Bharti Enterprises and Taiwanese manufacturing major Foxconn Technology Group for solar power projects. The total investment of the joint venture is set at $20 billion and will aim to set up 20,000 MW of projects over the next 10 years.
The venture, called SBG Cleantech Ltd, will mark Bharti’s entry into the renewable energy space.
While the equity structure is yet to be worked out, Mittal said his firm will be a strategic minority stakeholder and the majority will be owned by SoftBank. Foxconn will have an stake lower than Bharti’s. The partners clarified that whatever the investments from SoftBank, it will not be over and above the $10 billion commitment already made by it.
Core team The core team created for the joint venture is being headed by Bharti Enterprises’ veteran Manoj Kohli, who will be the Executive Chairman. The team is also working on the investment commitments of the three partners. However, Mittal indicated that there will be a large debt component.
“The Japanese financial system’s interest in this project is critical as we get a good interest rate from them. As soon as we win projects from any of the States, we will be up and running and you will see a lot of low-cost debt,” said Mittal. Bharti Enterprises and SoftBank already have a close working relationship. The two companies have a 50:50 joint venture, Bharti SoftBank, focussed on investing in the mobile Internet space.
While initially the renewable venture will source solar power equipment from foreign manufacturers, it plans to make them as well. This is where Foxconn will play a key role.
Masayoshi Son, Chairman and Chief Executive Officer of SoftBank, said, “We have invited Foxconn into the venture with the vision of manufacturing in India.”
He, however, added that manufacturing of equipment will only be undertaken if there is stability in the availability of land for solar power plants. India has set a target of 100 GW solar power generation capacity by 2022.
Mittal said they are eyeing projects in all available regions. The team will travel to Rajasthan and Andhra Pradesh in the next few days to assess opportunities.
Asked what prompted Bharti’s entry into the clean energy sector, which still faces certain degree of uncertainty, Mittal said: “Bharti is joining its hands with the vision of Masayoshi Son. In this project, we are clear that we are joining a project led by SoftBank, which does not handle small projects. We want to be part of India’s renewable energy programme and the ‘Make in India’ projects.”