Actis, the global infrastructure investment firm is buying a majority stake in 500 megawatts (MW) of solar projects in India owned by Finland’s state-controlled power utility, Fortum Oyj
Fortum, the third-largest Nordic utility has signed an agreement to divest the 250-MW Pavagada II and the 250-MW Rajasthan solar power plants in India, said a company statement.
The total consideration from the divestment on a debt and cash-free basis, including the effect of deconsolidation of the net debt is expected to be approximately EUR 280 million ($333 million).
The divestment will be completed and the capital gain recorded in three tranches – during the second half of 2021 and the first half of 2022.
Though Fortum has divested its entire stake in the Pavagada II project, it still retains 51percent stake in the Jaisalmer project in Rajasthan as per the regulatory requirements.
The acquisition that has an equity value of around Euro 100 million also involves Actis contributing equity to develop projects in India and overseas along with Fortum.
“Both parties have also signed a comprehensive agreement targeting further investments in solar power plants in India,” the statement said.
“We can utilise the strong competencies Fortum has gained over the years in solar development and construction, while utilising the financial strength and track record of Actis to realise the investment potential,” said Per Langer, Executive Vice President of Fortum’s City Solutions division.
Since 2013, Fortum has developed and constructed 680 MW of solar power in India. Over time, the majority of this capacity has been divested to enable further investments with a limited equity exposure, in line with the build-operate-transfer business model, the statement added.
“This is an important step for Actis as we further strengthen our presence in India building on our achievements to date. We are pleased to be entering into this transaction with a firm of Fortum’s calibre and competence,” said Mikael Karlsson, Partner and Head of Energy Infrastructure at Actis.