IDFC agrees $300m deal for First Solar assets

Indian fund manager to buy 190MW portfolio of projects from American company.

Indian asset manager IDFC Alternatives has agreed to acquire a 190MW portfolio of operating solar projects from American company First Solar for about $300 million. 

The acquisition will be made through IDFC’s India Infrastructure Fund II, a $900 million vehicle closed in 2014 with a target IRR in the high teens. Last year, the firm created a platform company for renewables investments and seeded it with about $70 million worth of operating solar and wind assets. 

The First Solar portfolio, comprising seven solar projects in the states of Andhra Pradesh and Telangana, will boost the portfolio size of IDFC’s renewables platform, dubbed Victor Green Energy Private, to 300MW, once the deal is approved, according to MK Sinha, managing director and chief executive of IDFC Alternatives.

The seven solar assets have secured long-term PPAs to sell their output to the states’ electricity distribution companies for 25 years. 

The firm is seeking to deploy more capital from Fund II to grow the renewables portfolio to 500MW by the end of this year, Sinha said. The firm is also looking at opportunities in a broad range of infrastructure sectors, such as transmission, roads and logistics, with an interest in acquiring controlling stakes in operating assets, he added.  

Fund II has invested in a highway platform company with seven operating assets, including gas-fired and thermal power projects and a 30 percent stake in a telecom tower business. 

The firm is “on track” to exit investments under its first infrastructure fund in the next six months, Sinha said. He added that Fund I has made five exits already – the latest being a 1.7 times money multiple exit from Essar Power for around $87 million this February.

The firm is managing two infrastructure funds with a combined $1.8 billion and has total assets under management of $3.4 billion.