IDFC makes largest exit in $220m Indian renewables deal

The multi-asset manager secured a 3.2 times return multiple and a 19% IRR from the sale of its remaining stake Sembcorp Green Infra.

IDFC Alternatives has fully exited its investment in Sembcorp Green Infra, one of the largest renewables developers in India, by selling its remaining stake to Singapore’s Sembcorp Utilities for approximately 14.1 billion rupees ($220 million; €185 million). 

The latest transaction marks the largest exit across all funds managed by the Indian alternative investment firm. The exit generated a 3.2 times return multiple and an IRR of 19 percent for IDFC PE Fund III, a $640 million investment vehicle, which closed in 2008. 

IDFC invested in the renewable energy company through its private equity funds in 2008, making it the country’s first PE-owned renewable energy platform. The firm sold the controlling stake to Sembcorp in 2015, followed by a full exit agreement signed last Thursday. It had received about 25 billion rupees in total from the aggregate exit from the renewable energy company over the past two years. 

The acquisition by Sembcorp, which is expected to be completed in the first quarter of 2018, will be funded through a mix of internal funds and borrowings, and payment will be settled in rupees, Sembcorp said. The Singaporean utility added the increased investment reflects its commitment to the Indian market and complements its thermal power businesses in the country. 

“Sembcorp has been a great partner to work with and has helped us to take the company to its next level of growth. We have been focused on exits and this marks the 36th exit from a portfolio of 42 investments,” said Girish Nadkarni, private equity partner at IDFC. 

Sembcorp Green Infra has close to 1.2GW of wind and solar power capacity in operation and under development, according to IDFC. It was awarded 250MW of India’s first national wind power tender earlier this year. The company had a net asset value of S$427.6 million ($315 million; €265 million), as of end of 2016, Sembcorp added. 

IDFC manages more than $3.6 billion across private equity, infrastructure and real estate. It also runs two infrastructure funds with a combined $1.8 billion in commitments.