JSW Neo Energy Limited (JSWNEL), a wholly-owned subsidiary of JSW Energy Limited, has made a strategic move to expand its renewable energy portfolio by acquiring the wind energy assets of Hetero Group. This acquisition includes three special purpose vehicles (SPVs) from Hetero Labs Limited and Hetero Drugs Limited, bringing a combined 125 MW of wind energy capacity under the umbrella of JSW Energy.

The three SPVs acquired as part of this transaction are:

Hetero Wind Power Limited

Hetero Wind Power (Pennar) Private Limited

Hetero Med Solutions Limited

This portfolio has been a significant contributor to Hetero Group’s renewable energy production, with cumulative revenues of INR 143.5 crores in FY 2023-24. With this acquisition, JSW Neo Energy aims to strengthen its position in the renewable energy sector, a space that is seeing increased investments as India pushes for sustainable energy solutions.

Strategic Growth for JSW Energy

JSW Energy is on a mission to achieve 10 GW of installed capacity by FY 2025, with a long-term goal of 20 GW by 2030. This acquisition is a crucial step towards that target, allowing the company to expand its presence in the wind energy sector.

The three wind projects acquired are primarily located in the states of Andhra Pradesh and Maharashtra, regions that are known for their favorable wind conditions and long-term power purchase agreements (PPAs). These assets will be brought under JSW Neo Energy Limited, which serves as the renewable energy arm of JSW Energy.

The acquisition also brings strategic benefits to JSW Energy’s overall business portfolio, as it enhances the company's commitment to sustainable energy and helps balance its conventional energy sources with clean energy alternatives.

Transaction Details

The acquisition, valued at an Enterprise Value (EV) of INR 630 crore, is subject to customary adjustments related to net working capital and other financial variables at the time of closing. The deal structure includes 100% acquisition of Hetero Wind Power (Pennar) Private Limited and Hetero Med Solutions Limited, while JSW Neo Energy will acquire ~74% of Hetero Wind Power Limited, with the remaining ~26% retained by a captive consumer.

The transaction will be completed after obtaining the necessary regulatory and lender approvals. The indicative timeline for completion is approximately 90 days, assuming all conditions precedents are fulfilled as outlined in the definitive agreements signed on 18th October 2024.

Industry Context: Renewable Energy Push

India’s energy landscape is undergoing a transformation, with renewable energy sources playing a pivotal role in meeting the country’s growing energy demands. JSW Energy, a key player in this sector, has been actively seeking opportunities to diversify its portfolio with clean energy projects.

The acquisition of Hetero Group’s wind assets further consolidates JSW Energy’s leadership position in the renewable energy space. The company has been investing heavily in both solar and wind energy projects, reflecting its long-term commitment to sustainability and aligning with the Indian government's goals of achieving 450 GW of renewable energy by 2030.

Government and Regulatory Approvals

As part of the acquisition, JSW Neo Energy will need to secure customary approvals, including those from financial institutions and lenders involved with the wind energy projects. Given the regulatory framework in India’s energy sector, obtaining these approvals is a key step in the successful transfer of assets. However, with JSW Energy’s strong track record and existing relationships with major financial institutions, the company is expected to meet these requirements within the stipulated 90-day period.

Financial Outlook

With a combined revenue from operations of INR 143.5 crore in FY2023-24, the acquired SPVs bring substantial financial value to JSW Neo Energy’s portfolio. Over the past three fiscal years, these entities have consistently generated revenues exceeding INR 125 crore, with a slight uptick in FY2024 reflecting favorable wind conditions and operational efficiency improvements.

By integrating these SPVs, JSW Neo Energy not only enhances its capacity but also secures a steady revenue stream from the long-term PPAs tied to these wind energy assets. This aligns well with JSW Energy’s strategy to deliver predictable earnings growth from its renewable portfolio.

Future Outlook

Looking ahead, JSW Energy’s focus on scaling its renewable portfolio will remain a core part of its growth strategy. The acquisition of these 125 MW wind assets is expected to pave the way for further investments in renewable energy projects. The company has already set ambitious targets and has been actively pursuing both organic and inorganic growth opportunities.

With its sights set on becoming a leader in clean energy, JSW Energy is positioning itself to capitalize on the increasing demand for renewable energy solutions in India. The company’s long-term goal of achieving 20 GW of installed capacity by 2030 puts it on track to become one of the largest renewable energy producers in the country, reinforcing its commitment to a greener and more sustainable future.

This acquisition represents a significant milestone for JSW Neo Energy Limited, helping the company achieve its growth targets while contributing to the broader objectives of energy transition and climate change mitigation.

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