Renewable Energy M&A: Sembcorp acquires GIP-backed Vector Green Energy in India for an Enterprise Value of $595mn

published on 15 November 2022
Renewable Energy M&A. Vector Green Energy. Global Infrastructure Partners. Sembcorp. India Infrastructure Fund II. Solar. Wind. India. Asia. November. 2022-o50xg

Vector Green Energy was established in 2017 by Global Infrastructure Partners (GIP). The company’s portfolio includes more than 652 MW of solar PV and wind assets spread across thirteen Indian states. The company also has ~1 GW of investment-ready solar projects and ~1.2 GW of solar projects in the pipeline.

As per Enerdatic’s research, the transaction involves the acquisition of 12 Special Purpose Vehicles (SPVs) totaling 583 MW of operational capacity. Power from rooftop projects is sold to commercial and industrial customers, while the rest is contracted under 25-year power purchase agreements (PPAs) with public utilities such as Solar Energy Corporation of India (SECI), National Thermal Power Corporation (NTPC), and Adani Energy. 

The buildout of Vector Green’s development pipeline is expected to be financed by the company’s debt issuances from last year. In Jun of ’21, the company issued $169.84 million of green bonds to pay off long-term debt and fund expansions. Later in October 2021, Vector Green secured a $185 million loan from the Indian Renewable Energy Development Agency (IREDA), marking IREDA’s highest disbursement to a single company in one day. Sembcorp has been in negotiations to acquire Vector Green since Apr’22, reportedly competing with companies such as JSW Energy, Torrent Power, and Apraava Energy reported to be part of the race to acquire Vector. The company was evaluated to have an equity value of $377 million and an enterprise value (EV) of $630 million. 

The activity in the Indian renewable energy sector almost doubled year-on-year so far in 2022, driven primarily by large, industrial conglomerates and private equity (PE firms). Earlier this year, UAE-based International Holding Company invested in Adani Green Energy and its 25 GW portfolio, which comprises more than 5 GW of operational projects and nearly 20 GW of under-development assets. US-based PE firm KKR also recently made two major investments in the country, partnering with Serentica Renewables and Hero Future Energies.

The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation.    

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