Azure Power Global Limited, a leading solar power producer in India, announced it has signed a binding agreement to sell its non-core solar rooftop portfolio to Radiance Renewables Pvt Ltd (Radiance), one of India’s leading providers of competitive renewable energy solutions for commercial, industrial and residential customers and a 100% subsidiary of the Green Growth Equity Fund (GGEF), India’s leading Climate fund, managed by Ever Source Capital, for a total consideration of INR 5,365 million (US$ 73.5 million1) subject to purchase price adjustments. The rooftop portfolio generated INR 331 million (US$ 4.5 million1) in EBITDA for the 12 months ending December 30, 2020. After excluding rooftop revenues, our new FY’22 revenue guidance is INR 17,200 – 18,200 million (or US$ 236 – $249 million1). In addition, the company now expects G&A (excluding stock compensation expenses and transaction costs) to be ~US$ 20 million compared to our previous guidance which assumed ~US$ 22 million inclusive of the rooftop portfolio. The company also expects the run rate CFe to improve as a result of this transaction. The company further expects to take an estimated INR 2,900 – 4,400 million (US$ 40 – $60 million1) one-time charge subject to purchase price adjustments and other conditions related to this sale. Proceeds are expected to be received before December 31, 2021. KPMG was the financial advisor and Trilegal was counsel to Azure Power on this transaction.
The rights of our Green Bond owners have been protected in respect of the 42.7 MWs that are part of the Restricted Groups (as defined in the respective Green Bond Indentures). As part of the sale agreement, 48.6% of the equity ownership in the 42.7 MWs will be transferred to Radiance, and the remaining 51.4% will be transferred post refinancing of our Green Bonds. All of the cash flows related to such 42.7 MWs are to remain in the SPV to service debt and cannot be up streamed until such refinancing and the remaining 51.4% equity ownership in the 42.7 MWs is transferred to Radiance. In the event transference does not occur, the company must reimburse Radiance the equity value of the assets not transferred along with an INR 10.5% per annum equity return.
Speaking on this occasion, Ranjit Gupta, Chief Executive Officer, Azure Power said, “This sale, the first ever asset sale in Azure Power’s history, illustrates the company’s commitment to capital discipline. The sale of this non-strategic portfolio allows us to enhance returns on invested capital through efficiency gains and cost optimisation whilst recycling capital into higher return, committed projects. Our focus is on creation of shareholder value.”
On this announcement, Manikkan Sangameswaran, Executive Director, Radiance Renewables said “This strategic acquisition will position Radiance as a significant pan India player in the Commercial, Industrial and Institutional segments with exposure to long term power purchase agreements with quality customers based on net metering in the build out of its distributed generation platform. This transaction allows Radiance to bring its high quality asset management skills to improve asset performance given its focus on enhancing and delivering value to its stakeholders. We plan to introduce cutting-edge asset management tools such as real-time monitoring with analytics and aim to make Radiance a leading Renewable Energy as a Service (REaaS) player in India.
