ORIX Corporation has signed a framework agreement for the partial acquisition of shares in Greenko Energy, a company undertaking renewable energy business in India.
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 percent of Greenko’s issued shares at closing for a total consideration of approximately $980 million.
ORIX’s exact and ongoing shareholding and investment amount may change as a result of transaction adjustments, exchange rates and future capital infusions.
Greenko is one of India’s two major renewable energy operators. In addition to an existing total capacity of about 4.4 GW operating renewable portfolio in India—such as solar, wind, and hydro, Greenko recently announced a 1.2 GW hydro asset acquisition and has additional capacity under construction and in development of over 8 GW.
The company was established in 2004 by two founders, with investments from Singapore’s Government Investment Company (GIC) in 2013 and the Abu Dhabi Investment Authority (ADIA) in 2016. Currently, GIC owns 65.8 percent of Greenko’s shares, while ADIA owns 16.5 percent.
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.
The renewable energy market in India has reached grid parity thanks to lower construction costs and favorable 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.