PTT Group, a Thai state-owned oil and gas company, has currently initiated talks with investment banking company, Goldman Sachs, to purchase a stake in ReNew Power. This highlights the rising interest of the oil and gas companies in Southeast Asia to enter green ventures.
People with knowledge of the matter have cited that the deal is expected to lead to the sale of at least half of the Wall Street investment bank’s stake in ReNew, which is a renewable energy company. The decision is likely to be finalized in the next few weeks. PTT is conducting due diligence and has revealed that it might invest a minimum amount of $500 million in the deal, at a valuation of $2.2 billion. Sources further added that PTT may become the largest shareholder following this transaction, which may also lead to some primary capital infusion.
This discussion has been reportedly led by teams of Goldman in Hong Kong and London. The traditional oil & gas companies have been diversifying its focus on environment-friendly investment opportunities.
ReNew is a leading independent power producer in India, with over 10-GW of under construction and operational wind & solar capacity. The majority of its assets, with a 96% group capacity, have PPAs (power purchase agreement) with tenors of nearly 20 to 25 years. However, industry players have reported that the company has been facing pressures of cash flow and has ₹32,487 crore ($4.3 billion) in total debts. This is due to the company’s borrowings for the acquisition of various firms including Ostro, prior to the Initial Public Offering (IPO).
Additionally, up to 2-GW of projects in Maharashtra, Rajasthan, Tamil Nadu, Telangana, and Andhra Pradesh are currently facing delayed payments from various state electricity boards or are in litigation over the sanctity of its contracts. This has forced ReNew to deleverage by selling assets and seeking partnerships.
ReNew and Goldman are yet to respond to requests for comments. Additionally, PTT did not respond to queries on the recent stake acquisition plan.