Key Takeaways
- ReNew is planning to sell its hydropower unit, estimated at around ₹1,000 crore, as part of its asset recycling strategy.
- The hydropower unit, acquired from Larsen & Toubro, includes three commissioned plants in Uttarakhand with a total capacity of about 100 megawatts.
- The sale could attract interest from major players in the hydropower sector, including JSW Neo Energy and Adani Power.
ReNew’s Hydropower Unit on the Market
ReNew is in discussions to sell its hydropower unit, seeking approximately ₹1,000 crore for the asset. This unit, which was purchased from Larsen & Toubro five years ago, comprises hydroelectric projects located in Uttarakhand. This potential divestment is part of ReNew’s broader asset recycling strategy, which aims to sell off commissioned assets and utilize the capital to initiate new projects.
The hydropower sector typically entails lengthy gestation periods for investments, making the sale appealing to private firms engaged in such generation. Companies like JSW Neo Energy, Adani Power, Torrent Power, KKR-backed Serentica Renewables, and LNJ Bhilwara are among those likely to be approached regarding the acquisition.
Acquired in August 2021 for ₹985 crore, the L&T Uttaranchal Hydropower unit has three operational power plants along the Mandakini River, near Kedarnath, contributing a combined capacity of approximately 100 megawatts.
Despite the ongoing move to divest, the company is recovering from a previous setback related to a failed bid to transition into a privately held entity. Last year, a significant investor, Abu Dhabi-based Masdar, withdrew from a financing consortium intended for the delisting, leading to uncertainty regarding ReNew’s future focus. However, ReNew’s CFO, Kailash Vaswani, stated that the company holds cash and equivalents amounting to $1 billion, assuring that there is no immediate pressure to raise additional capital.
In the context of the broader energy landscape, the interest in ReNew’s hydropower unit may also be influenced by India’s current energy challenges, particularly as weak monsoon conditions have impacted hydropower output across the country. Last year marked the sharpest decline in dam output in over two years, making the efficient use and management of existing hydropower assets increasingly crucial.
As the company looks to move forward, engaging with established players in the hydropower market can provide ReNew with the necessary leverage to tap into new opportunities while strategically aligning its assets for future growth.
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