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JSW Energy Seals Largest Deal Since Inception; To Buy O2 Power For $1.5 Bln

The acquisition of 4.7-GW renewable energy platform would help JSW Energy in achieving its renewable-led capacity growth target of 20-GW before FY30

Staff Reporter | 27 December 2024 | 08:40 PM

(The Corner Office Journal) -- JSW Energy Ltd. will acquire Indian renewable energy platform O2 Power at an enterprise value of 12,468 crore rupees ($1.46 billion), its largest acquisition since inception, to leapfrog the company’s growth ambitions.


The company’s wholly owned subsidiary JSW Neo Energy Ltd. signed definitive agreements to acquire O2 Power platform from O2 Power Pooling Pte. Ltd., O2 Power SG Pte. Ltd. and certain individuals, the Indian power producer said in a stock exchange announcement.


O2 Power platform, whose locked-in capacity stands at 4.7 gigawatts (GW), was jointly set up by EQT Infrastructure and Temasek in 2020.


Under the pact, JSW Neo Energy will acquire O2 Power Midco Holdings Pte. Ltd., O2 Energy SG Pte. Ltd. and their subsidiaries (O2 Power entities).


The target entities cumulative audited revenue from operations stood at 538 crore rupees in FY24, sharply up from 136 crore rupees a year earlier.


Thrilled On Largest Deal


“We are thrilled to announce the acquisition of O2 Power’s 4.7-GW renewable energy platform, which is JSW Energy’s largest acquisition since inception,” the company’s Joint Managing Director and Chief Executive officer Sharad Mahendra said in a statement.


JSW Energy said the acquisition would help the company in achieving its renewable-led capacity growth target of 20-GW before FY30.


The acquisition will leapfrog JSW Energy’s locked-in generation capacity by 23.5% to 24.71-GW from 20.01-GW and strengthen the company’s positioning as a leading player in India’s energy sector, it added.


“This is a very attractive acquisition -- both from Build versus Buy trade off as well as from a quality and value perspective -- when compared to all acquisitions in this space over recent times,” said Pritesh Vinay, director of finance and chief financial officer of JSW Energy.


O2 Power Capacity & Tariff


O2 Power platform’s locked-in capacity stands at 4.7-GW across solar, wind, hybrid and firm and dispatchable RE (FDRE)/round-the-clock (RTC) renewable energy projects spread across seven states in India.


JSW Energy said O2 Power’s 2.26-GW capacity will be operational by June 2025. Around 1.46-GW is currently under construction and 974 megawatts are in the pipeline, all scheduled for commissioning by June 2027, it added.


The company also said the platform’s majority of the capacity is tied-up under long-term power purchase agreement with quality off-takers like Solar Energy Corporation of India (SECI), SJVN Ltd. and NTPC Ltd.


The platform has a blended average tariff of 3.37 rupees per kilowatt-hour (KWh), with a remaining life of about 23 years.


In addition, JSW Energy said the commercial & industrial (C&I) capacity of the platform stands at 596-MW, which takes the company’s total C&I capacity to 3.69-GW, including JSW Group C&I capacity of 2.65-GW.


Deal Closure


The proposed deal is expected to be completed by 26 May 2025, subject to fulfilment of the conditions under the definitive agreements.


The cash-acquisition is also subject to clearance from the Competition Commission of India (CCI) and other customary approvals.


Following the deal completion, the O2 Power entities will become subsidiaries of JSW Neo Energy and step-down subsidiaries of JSW Energy.


PwC acted as the transaction advisor to the company, while Khaitan & Co. and Herbert Smith were the legal advisors. KPMG carried out financial and tax due diligence while Wind Guard performed the technical due diligence.


Note: $1 = 85.3628 Indian rupees


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JSW Energy JSW Neo Energy O2 Power Sharad Mahendra Pritesh Vinay