Billionaire Mukesh Ambani’s Reliance Industries Ltd on Sunday announced two back-to-back acquisitions – a USD 771 million buyout of Norway-based solar panel manufacturer REC Solar Holdings and purchase of 40% stake in Shapoorji Pallonji Group”s Sterling & Wilson Solar – as the oil-to-retail conglomerate moved to create a multi-billion-dollar clean energy portfolio.
Reliance New Energy Solar Ltd (RNESL), a wholly-owned subsidiary of RIL, acquired “100% shareholding of REC Solar Holdings AS (REC Group) from China National Bluestar (Group) Co Ltd for an Enterprise Value of USD 771 million (about Rs 5,800 crore),” the firm said in a statement.
Hours later, it announced through another statement buying of a 40% stake in solar engineering, procurement, construction (EPC) firm Sterling & Wilson Solar Ltd (SWSL) in a multi-stage transaction for about Rs 2,845 crore.
While REC makes solar-grade polysilicon and solar panel and modules at facilities in Norway and Singapore and has more than 1,300 employees globally, SWSL has the expertise in executing 11-plus gigawatts of solar turnkey projects globally.
Reliance will use REC”s technology to manufacture metallic silicon and solar panels and SWSL”s EPC expertise at its gigafactory at Jamnagar in Gujarat, with an initial annual capacity of 4 gigawatts, eventually rising to 10GW.
The REC acquisition is an outright purchase while the 40% stake in SWSL would be done through “a combination of primary investment, secondary purchase, and open offer.”
SWSL will make a preferential allotment of 2.93 crore shares (equivalent to 15.46 per cent post preferential share capital) to Reliance New Energy Solar Ltd at a price of Rs 375 per share, totaling Rs 1,098 crore. RNESL will further acquire 1.84 crore shares from SPCPL (equivalent to 9.70 per cent) at a price of Rs 375 per sahre, totaling Rs 690 crore.
Thereafter, RNESL will acquire up to 4.91 crore equity shares of SWSL, representing 25.9 per cent, through an open offer.
Ambani had at the RIL annual general meeting announced spending of Rs 60,000 crore on creating clean energy manufacturing capacity and Rs 15,000 crore on the value chain and technology.
The acquisition announced on Sunday are part of the USD 2 billion Ambani had earmarked for acquisitions to create clean energy capabilities.
“It is in line with our strategy of investing in new and advanced technologies and operating capabilities aimed at achieving Reliance”s goal of enabling 100 GW clean and green energy before the end of this decade,” Ambani said in REC acquisition statement.
Having committed to net-zero carbon by 2035, India”s largest company by market value plans to build solar photovoltaic panels, batteries, hydrogen fuel cells, and electrolysers over the next three years.
The plan comes as companies and investors globally switch to sustainable investments and seek suppliers with similar commitments to curb greenhouse emissions.
Reliance plans to install 100-GW solar capacity by 2030 to become one of the largest domestic players with more than 30 per cent market share.
It aims to build four ”giga factories” to produce solar cells and modules, energy storage batteries, fuel cells and green hydrogen.
On Saturday, Reliance signed an MoU with Stiesdal Fuel Technologies of Denmark for developing a hydrogen electrolyser and its manufacturing and deployment in India.
Reliance has plans for battery business, with capacity expected to reach 1% of the total global capacity, or 2% of the top six battery maker”s capacity by 2025. It is expected to construct 2.5GW of fuel cell capacity and 2.5GW of electrolyzer capacity by 2025.
“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.
RNESL said in August it would invest USD 50 million in US energy storage company Ambri Inc as part of a USD 144 million investment by RIL, along with billionaire Bill Gates, investment management firm Paulson & Co and others.
“Combined with Reliance”s announced plans to set up four state of art giga factories in Jamnagar, Gujarat, the partnership offers a fully integrated product with unrivaled engineering capabilities,” the statement on SWSL acquisition said.
The REC acquisition will help the Indian giant expand in green energy markets globally, including the US, Europe, Australia and elsewhere in Asia.
Ambani said his firm would continue to invest and collaborate with global players to provide reliable and affordable power to customers in India and overseas markets.
The acquisition would help Reliance grow in key green energy markets globally, including in the United States, Europe, Australia and elsewhere in Asia, the statement said, adding it would support REC”s planned expansions in Singapore, France and the United States.
“REC Group is an international pioneering solar energy company leading the industry through its technological innovations and superior, high efficiency and long-life solar cells and panels for clean and affordable solar power. The 25-year-old company has three manufacturing facilities – two in Norway for making solar grade polysilicon and one in Singapore making PV cells and modules,” it said.
Reliance said it will strongly support REC”s planned expansions including 2-3 GW Cells and Module capacity in Singapore, brand new 2 GW Cells and Module unit in France and another 1 GW Modules plant in the US.
“In India, Reliance plans to use this industry leading technology in their fully integrated, metallic Silicon to PV Panel manufacturing giga factory at Dhirubhai Ambani Green Energy Giga Complex, Jamnagar initially starting with 4 GW per annum capacity and eventually growing to 10 GW per annum.
“Reliance”s deep expertise of scale, project execution and operational excellence coupled with REC”s technology will facilitate the establishment of state-of-the-art next-generation fully integrated PV manufacturing facility at Dhirubhai Ambani Green Energy Giga Complex and subsequently replicate such complexes around the world,” it said.
Ambani said the acquisition is in line with Reliance”s strategy of investing in new and advanced technologies and operating capabilities aimed at achieving the goal of enabling 100 GW clean and green energy before the end of this decade.
“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,” he said.
“We will continue to invest, build and collaborate with global players to achieve the highest reliability, efficiency and economies to deliver high-quality, reliable power at affordable prices to our customers both in India and markets worldwide.”
On SWSL acquisition, Ambani said the company with its engineering talent, deep domain knowledge, global presence, and experience of executing some of the most complex projects globally, will become an important part of Reliance”s solar value chain.
“This will enable us to deliver our comprehensive, end-to-end ecosystem leading to cost-efficient green energy for Indian consumers.”
Shapoor Mistry, Chairman of Shapoorji Pallonji & Co Pvt Ltd, said: “SWSL is now well-poised to make a valuable contribution, as the world transitions to a low-carbon economy. I believe this partnership is beneficial to all stakeholders and will greatly contribute to making India a leading green energy powerhouse.”
Khurshed Daruvala, Chairman of SWSL said, “The history of Sterling and Wilson dates to the 1920s. We have come a long way since then and have always stayed true to our core values of delivering high quality engineering solutions to our customers. Along with the Shapoorji Pallonji Group we have made SWSL a global leader in providing turnkey solutions in the energy value chain.
“Reliance, with its integrated new energy vision, and a commitment to put India on the global green energy map, provides us a great opportunity to further establish SWSL as the leading EPC solutions provider globally. I am sure this partnership will give SWSL new energy and excitement, and we look forward to becoming part of creating history.”
Daruvala will continue to be Chairman of the Board and lead the next phase of growth for SWSL.
Categories: Corporate M&A