The year 2015 witnessed the famed collaboration between the Kumar Mangalam Birla owned Aditya Birla Group with the Dubai- based equity house Abraaj Group for the latest venture of the Birlas in the renewable energy sector. However, the current news is that the Birlas are looking out for new investors on the same project. The present status of the project is that the Birlas are in possession of 51% of the shares while the Gulf counterpart is holding the remaining 49% of the shares.
As the statement from the Aditya Birla Group runs, “The solar power platform will bid for projects tendered at national and state auctions, with the intent to develop and operate utility-scale solar power plants that can provide clean and cost-effective electricity to national grids across several key states in India.” The Birla group is holding on discussions with various foreign investors who might be interested in the renewable energy project. The spokesperson from the Birla Group also added, “They want to grow the business and they are seeking to bring on board a new deep-pocketed investor. They are looking for a large pension or sovereign wealth fund kind of investor. They are looking at some investors from the Gulf region.”
If the present market story is to be believed, the new investor might take the whole project or might also be interested in buying only a part of it. A reliable source has stated, “Abraaj Group has been facing challenges since the start of the year as several of its investors raised concerns of misuse of funds and commissioned an investigation. The ongoing troubles at Abraaj raise concern about its ability to focus on this business and thus a new investor that Birla gets on board might be asked to buy out part or whole of Abraaj’s stake.”
It must be noted that the Abraaj Group has not responded on the emails sent and on the market speculations. Apparently, the Abraaj Group is facing allegations of misused fund.
Cerberus Capital Management Lp, a special situations investor, has bid $125 million to acquire Abraaj’s private equity business. The Indian government’s ambitious target to generate 175 Giga Watts (GW) of renewable energy power by 2022 has encouraged many large investors to invest in the sector.