M&A Prospects in Indian Power Generation Sector: Identifying Thermal, Wind, Solar and Biomass Power Plants

  • ID: 2766598
  • Report
  • Region: India
  • 180 Pages
  • InfraInsights
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  • Adani
  • CESC
  • E.ON
  • GDF Suez
  • Lanco
  • NTPC
  • MORE
About 65,000 MW of thermal capacity across India runs the risk of turning into bad assets; Given a capital cost of Rs 5 crore per MW, that is upwards of Rs 3,00,000 crore at risk; much of this is bank loans as these projects, typically, came up with a 80 per cent debt component

Companies that had acquired land, signed MoUs (memorandums of understanding), coal linkages, etc are now looking to sell and exit

As per an estimate, as many as 700 thermal plants across India applied for an environmental clearance between 2006 and 2010. Between them, they were looking to add 701,820 MW of capacity—about six times India's overall power capacity in 2011 and seven times the target for the 12th five-year plan (2012-17)

The M&A space in the power generation sector in India is expected to gain further traction from hereon. The authors of the view that this is the most conducive time to buy these assets for anyone looking for strategic investment in India’s power story. Most of the Indian companies that entered into power sector with short term goals are seeing themselves being trapped into the sector and are surrounded by some of the unexpected development both on structural and commercial front, these companies want to exit from power business.

There are companies that went on investment spree over the years only to find that the economic slowdown in India has hammered their balance sheets out of shape, and hence are in a balance sheet repair mode with asset offload as the only available option. The authors had anticipated this well in advance and hence initiated research on the topic in 2013 in its research report M&A Prospects in Indian Power Generation Sector: Identifying Thermal, Wind, Solar and Biomass Power Plants likely to be up for Sale"" covers all such plants that are likely to become distressed asset

The report is envisaged keeping in mind the need of the industry to get critical information pertaining to assets that are likely to be put on block for sale, this will act as preliminary due diligence before the companies interested in buying power assets deploy investment bankers to evaluate attractiveness of the asset. The report rates each and every asset and buckets each asset under three categories - valuation event asset, distressed asset, strategic divestment asset.

The report applies technical and economical parameters as filter to the large universe of private sector power plants, some this parameters are; plant plf (operating below 50%), fuel linkage status, ppa sale vs merchant sale, balance sheet leverage, rupee depreciation impact. It's a report which is must for both Indian and MNCs looking for power assets in India in both conventional and non-conventional space.

Key Questions Answered

- Why are companies exiting power generation business in solar and wind?

- What type of assets in power generation space in India is most attractive?

- Are the assets up for sale mainly of distressed asset type?

- What are the factors that will drive M&A activity in the power generation space in India?

- What are the typical valuations of assets up for sale in power generation segment?

- What are the regulatory hurdles & typical timelines for such transaction to go through in India?

- Is it the right time to acquire power generation assets in India?

- What is the status of various power plants that were scheduled to get commissioned by end of XIth Plan?

- Why NTPC is going for acquisition route to expand in the domestic market?

- Are Indian companies looking for power assets in other geographies?

- Which are the assets that one should avoid in the Indian market?

- What is the likelihood of fuel shortage scenario turning around in India?

- Policies & Regulations to watch for before evaluating or taking buy decision on any asset in solar, wind, biomass and thermal power generation sector?
Note: Product cover images may vary from those shown
2 of 4


  • Adani
  • CESC
  • E.ON
  • GDF Suez
  • Lanco
  • NTPC
  • MORE
1. Executive Summary

2. Evaluating Factors Favoring Investments in Power Generation Sector in India

- Demand Supply Scenario
- Revenue Models (Merchant Sale, Open Access, PPA)
- Regulations & Policies
- Outlook
- Trends in Power Prices in India (Generation & Distribution Level)

3. Evaluating Factors Risking Viability & Sustainability of Power Generation Sector in India

- Widening Fuel Demand and Supply Gap
- Challenges in securing Fuel Linkage
- Impact of Land Acquisition Bill
- Rupee Devaluation
- Increasing Cost of Capital
- Leveraged Balance Sheet
- Restrictions on Importing BTG
- Water Shortage

4. Status Check on Upcoming & Planned Power Plants in India

- Thermal Power – Coal & Gas
- Wind Power
- Biomass Power
- Solar Power

5. Status Check on New Investment / Expansion Plans of Companies in Power Generation Sector

- Indian Companies likes of Adani, Reliance Power, Tata Power, CESC, Torrent, Lanco, GMR, Essar, NTPC
- MNCs likes of CLP, GDF Suez, E.ON, AES

6. Trends in M&A deals in Power Generation Sector

- Who’s buying – Analyzing Strategy
- Who’s selling – Analyzing Reasons for Exit (Distress Sale, Strategic Exit)
- Number of Deals in Value and Volume
- View of Investment Bankers
- Trends in Valuations

7. Detailed Asset Profiling of Assets up for Sale – Primary Survey

- Project – Location, Name, Capacity Current Status, Size, Fuel, Project Type
- Technology Used
- Date of Start of Construction & Planned Date of Commission
- PPA Status, Fuel Linkage
- Capital Investment – Equity vs Debt
- Ownership Pattern
- Challenges Faced
- Looking for Stake Sale / Exit

8. Identifying Key Reasons for Exiting Power Generation Business

- Private Indian Companies
- MNCs Operational in India

9. Regulations Governing M&A in Indian Power Sector

10. Due Diligence of Shortlisted Attractive Assets

- Distress Sales Vs Valuation Sales
- Recommendation

11. Power Plants Asset Database

- Thermal Power – Coal & Gas
- Biomass Power
- Wind Power
- Solar Power
Note: Product cover images may vary from those shown
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- Adani
- E.ON
- Essar
- GDF Suez
- Lanco
- MNCs
- Reliance Power
- Tata Power
- Torrent
Note: Product cover images may vary from those shown
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Note: Product cover images may vary from those shown