Coming to a Close

By Ashay Abbhi

The rapid evolution of the Indian renewable energy sector over the past few years has significantly altered the operational dynamics of the market. Decreasing tariffs and diminishing margins are exerting a downward pressure on companies, often questioning the long-term sustainability of their existing business models. The low entry barriers that once encouraged competition in the market are now being threatened by even lower exit barriers. Merger and acquisition (M&A) activity is rife, resulting in significant consolidation in the market. Some of the biggest players have either exited or are in the process of exiting the renewable energy space by either getting acquired or selling off their assets to competitors with deeper pockets. Such market developments at times create uncertainties that can have a severe impact on impending deals.

The acquisition of Delhi-based Orange Renewables is one such deal that has gone through several crests and troughs ever since it has been in the market. The company is now finally in the process of being acquired by the GIC Holdings and Abu Dhabi Investment Authority-backed Greenko Group. Many suitors, including ReNew Power, had initially evinced interest in acquiring Orange; however, it was only with Greenko that the deal gained some traction. Renewable Watch takes a closer look at the timeline and the key developments that brought the deal to its current level…

Key developments

In June 2018, Greenko was set to announce its acquisition of Orange for an enterprise value of $1 billion, making it one of the biggest deals in the country’s renewable energy space. With the acquisition of about 1 GW of Orange’s renewable energy assets across five states, Greenko would have moved to the helm of the Indian renewable market, at par with Goldman Sachs-backed ReNew Power with 4.3 GW of assets, after it acquired Ostro Energy for $1.6 billion in April. However, in August, amid strong headwinds, the deal to acquire Orange by Greenko was called off due to a host of reasons. The roadblock in the deal marked a pause in the heavy M&A activity in the renewable energy market.

Orange’s wind power assets in Andhra Pradesh proved to be a major pain point in the deal. A policy order by the Andhra Pradesh Electricity Regulatory Commission (APERC), which effectively reduced the tariff paid to wind power projects eligible for generation-based incentives (GBIs), significantly impacted the tariffs of Orange’s wind power capacity in the state, thereby hitting its assets and valuation. After a petition filed by renewable energy companies including Orange, the APERC order was stayed by the Andhra Pradesh High Court in August 2018.

Greenko also raised concerns regarding the status of Orange’s holding company that was to be acquired with all the assets by the former. However, if the holding company was regarded as a core investment company, the terms of the contract would change as a whole different set of Reserve Bank of India guidelines would need to be complied with for this deal.

As of October 2018, Greenko is at an advanced stage of closing the deal, with slightly altered terms. Orange is now available to Greenko at a discount of $75 million, taking the price tag down from $1 billion to $925 million. Of this, Greenko is slated to pay $300 million in equity.


The on-again, off-again nature of the Greenko-Orange deal points to the extent of uncertainty that has seeped into the renewable energy space. It also serves as a note of caution to policymakers against taking policy decisions that may have a larger impact on the renewable energy business ecosystem.

Despite the hurdles, the deal is near fruition and will make Greenko one of the largest players in the Indian renewable energy sector, with a total capacity of about 4.2 GW. The company has also expressed its intent to buy Skeiron Renewable Energy, with a portfolio of 385 MW of wind power projects, for an enterprise value of about Rs 35 billion. Skeiron is a renewable energy platform set up by Suzlon Energy, Olympus Capital and Asia Climate Partners.

The plans for back-to-back acquisitions by Greenko indicate a larger shift in domestic renewable energy dynamics, driven by inorganic growth as opposed to bidding for projects and developing them. Troubled margins, owing to low tariffs, voracious appetite and deep pockets, may lead to greater consolidation, leaving only a few top companies to bid for projects, in turn, perhaps creating a situation that may not be entirely favourable to competition-driven market growth.


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