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Canada Pension Plan Investment Board looking to buy part of Goldman Sachs stake in ReNew Power
Canada Pension Plan Investment Board (CPPIB) is in talks to increase its stake in renewable energy company ReNew Power Ltd by purchasing some of the shares that larger shareholder Goldman Sachs has put up for sale, two people aware of the development said.
Founded by Sumant Sinha in 2011, ReNew Power has 5.85 gigawatts (GW) of renewable power capacity across wind and solar projects. Of this, 3.92GW is operational. Goldman Sachs was ReNew’s first investor, while CPPIB, Canada’s largest pension fund manager, entered with a $391 million investment earlier this year.
“Goldman has been looking to divest part of its stake in ReNew and the planned IPO of the company was largely an effort to provide Goldman the avenue to sell part of its shareholding. They are looking to sell up to 20% stake, similar to what they were planning to sell through the IPO. They are doing a private stake sale as they believe that the private markets will offer them better valuation than what the public markets were willing to offer,” said one of the two people cited above, requesting anonymity as the talks are private.
Several investors, especially Canadian funds, have shown interest in Goldman’s stake sale and CPPIB is one of the funds holding talks, he added.
Mint reported on 21 September that Macquarie Group is also in talks to acquire the Goldman stake . In August, ET NOW reported that Canada’s OMERS (Ontario Municipal Employees Retirement System) was in talks to invest $300 million in ReNew.
“We do not comment on speculation,” a spokesperson for CPPIB said in an e-mailed response to queries. A spokesperson for Goldman Sachs declined to comment.
Goldman Sachs owns 48.6% stake in ReNew Power, while CPPIB holds 16.2%, according to the draft IPO prospectus filed by the company in May.
According to the second person cited above, the stake sale could help ReNew bag another deep-pocketed investor that can help the company to grow at a time of abundant organic and inorganic growth opportunities in the renewable sector.
“There are several renewable portfolios that are on the block and having a deep-pocketed investor to back you can help the company keep growing at a fast clip. ReNew has had a strong focus on acquisitions in the past,” this person said, also requesting anonymity.
In April, ReNew Power acquired private equity investor Actis-owned Ostro Energy Pvt. Ltd, which owned a portfolio of 1.1 GW of renewable assets. In the previous year, it acquired 103 MW of renewable assets from KCT Group. The proposed ReNew Power IPO would have seen the company ₹2,600 crore in fresh capital and existing private equity investors selling an aggregate of 94.37 million shares. Goldman alone was looking to sell 79.78 million shares, according to the draft prospectus filed the company in March.
Apart from Goldman and CPPIB, ReNew Power also counts investors such as Asian Development Bank, sovereign wealth fund Abu Dhabi Investment Authority, Global Environment Fund and Japan’s JERA Co. Inc. as its shareholders. These investors, over several tranches, have invested a total of ₹6,696.5 crore in the company since 2011. In February 2017, JERA bought a 10% stake in ReNew Power, valuing the company at $2 billion.