ORIX announced that it has signed a framework agreement with Greenko Energy Holdings regarding partial acquisition of shares in Greenko. Going forward, ORIX aims to execute definitive agreements and completion of the transaction by the end of the year subject to investment committee approval after completing due diligence and other legal procedures required.
In addition to acquiring Greenko’s issued shares from the founders’ group, ORIX will integrate its entire wind power generation business in India into Greenko in exchange for Greenko’s new shares. Through this plan, ORIX will acquire more than 20% of Greenko’s issued shares at closing for a total consideration of approximately 980 million U.S. dollars. ORIX’s exact and ongoing shareholding and investment amount may change as a result of transaction adjustments, exchange rates and future capital infusions.
Currently, GIC owns 65.8% of Greenko’s shares, while ADIA owns 16.5%. Greenko has long-term power purchase agreements (PPA) averaging over 20 years with India’s government-operated agencies, state-owned power companies, and other entities, establishing high growth potential and a stable income base.
Greenko is focused on building integrated renewable energy projects (IREP), business which supplies electricity from renewable sources that is not affected by the weather at costs equivalent to thermal power stations and similar facilities. This is achieved by combining renewable energy sources such as solar and wind power with pumping-storage hydro. High demand is expected from state-owned power companies which have high procurement needs for electricity originating from renewable energy as well as companies with a high level of environmental awareness such as those under RE100 or advocating net zero carbon.
The renewable energy market in India has reached grid parity thanks to lower construction costs and favourable climate conditions, yielding cost advantages even when compared to thermal power. India’s government has set a renewable energy target of 175 GW by 2022 against an expected renewable energy level of 113 GW in 2020. Installed renewable capacity in 2030 may reach 389 GW based on Bloomberg NEF’s forecast, and going forward, further expansion of the renewable energy market in India is expected.
Within Japan, ORIX is actively promoting its renewable businesses, such as solar, wind, geothermal, biomass, and biogas. ORIX has a total capacity of approximately 1 GW in its solar business. Going forward, using the experience and expertise it has cultivated thus far, ORIX intends to expand its renewable energy business in and outside Japan, as well as business expansion in Asia.
