Reliance Industries Ltd has agreed to acquire 100% of Norway’s REC Solar Holdings AS and 40% of India’s Sterling & Wilson Solar Ltd for a total of $1.15 billion, as India’s biggest private-sector conglomerate moves quickly to establish its renewable energy business.
Reliance—led by billionaire Mukesh Ambani, Asia’s richest man—aims to create a renewable energy capacity of 100 GW by 2030 and has previously said it would invest $10 billion for the business. The acquisitions of REC and Sterling & Wilson will help the energy-to-telecom conglomerate to do just that.
RIL said its wholly owned unit Reliance New Energy Solar Ltd will buy REC Solar from China National Bluestar (Group) Co Ltd for an enterprise value of $771 million. REC is headquartered in Norway and has its operational headquarters in Singapore. It has regional hubs in North America, Europe, Australia, and Asia-Pacific.
REC, a 25-year-old company, has three manufacturing facilities – two in Norway to make solar grade polysilicon and one in Singapore to make PV cells and modules. It has more than 1,300 employees globally.
Reliance said it will support REC’s planned expansion including 2-3 GW cells and module capacity in Singapore, a new 2 GW cells and module unit in France and another 1 GW modules plant in the US.
In India, Reliance plans to use REC’s technology in its PV factory at Dhirubhai Ambani Green Energy Giga Complex at Jamnagar in Gujarat state, initially starting with 4 GW a year capacity and eventually growing to 10 GW a year.
The acquisition of REC will provide Reliance a ready global platform to expand in globally, including in the US, Europe, Australia and elsewhere in Asia.
“Together with our other recent investments, Reliance is now ready to set up a global scale integrated Photovoltaic Giga factory and make India a manufacturing hub for lowest cost and highest efficiency solar panels,” Ambani said.
Sterling & Wilson Solar
Reliance New Energy has also signed agreements with Shapoorji Pallonji and Company Pvt Ltd and Sterling & Wilson Solar’s chairman Khurshed Daruvala to buy a 40% stake in the solar company through a multi-stage transaction.
The company will subscribe to new shares equivalent to a 15.46% stake in the solar company for Rs 1,100 crore ($16 million) and buy a stake of up to 24.54% stake from Shapoorji Pallonji Group and Daruvala for Rs 1,745 crore ($232 million).
It has also made an open offer to purchase up to 25.9% from public shareholders at a price of Rs 375 per share. Shares of Sterling & Wilson Solar jumped 13% on Monday morning to trade around Rs 491 apiece, making the success of the open offer highly doubtful. The shares have more than doubled from a one-year low of Rs 202 in October last year.
Sterling & Wilson Solar is an engineering and construction company in the renewable energy sector. It has 3,000 employees and presence across 24 countries.
For the Shapoorji Pallonji Group, the deal adds to its asset sales over the past year and a half to cut its debt. Last year, the group sold five solar energy assets to private equity firm KKR. It sold two solar power projects to Adani Group in March this year and 17 operational rooftop solar projects to Amplus Solar, the Indian arm of Malaysian state-run oil and gas company Petronas.