Why the Mytrah buy could be more than sum of parts for JSW Energy

Mytrah Energy deal value accretive for JSW Energy
Mytrah Energy deal value accretive for JSW Energy

by 5paisa Research Team Last Updated: Dec 12, 2022 - 04:37 pm 20k Views
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JSW Neo Energy, a 100% subsidiary of JSW Energy of the Sajjan Jindal Group, is all set to make one of its biggest and most high profile acquisitions in the renewable energy space. It will buy a portfolio of 1,753 MW (1.753 GW) of renewable energy generation capacity from Mytrah Energy (India). The deal will be struck at an enterprise value (EV) of approximately Rs10,530 crore. The portfolio of JSW Neo Energy will comprise a total of 17 special purpose vehicles (SPV) and 1 ancillary SPV. This deal would be a game changer for JSW Energy. 

On the strength of this acquisition, the total existing operational generation capacity of JSW Neo will go up by more than 35%. Effectively, the total generation capacity will traverse from 4,784 MW to 6,537 MW. While the definitive agreements and the term sheets have already been signed between the two parties, the final approval of the Competition Commission of India (CCI) and other relevant statutory customary approvals.

This is likely to catapult JSW Energy into a higher plane and be a game changer for its future plans.
Currently, the Mytrah portfolio comprises of 10 wind SPVs having a total generation capacity of 1,331 MW. In addition, it also has 7 Solar SPVs with a total generation capacity of 422 MW. However, these units are primarily in the southern, western and central parts of India. Most of these existing assets have a clear track record to show and also a proven operational track record. In addition, JSW Energy also has long-term PPA (power purchase agreements) having an average residual life of around 18 years.

Apart from the existing portfolio of JSW Energy, there is about 2,500 MW of wind and hydro projects that are currently under implementation. These projects are likely to be commissioned in phases over a period of the next 18 to 24 months. With the Mytrah purchase, the total JSW Energy platform capacity gets a boost to about 9.1 GW. What is more relevant is that the share of renewables increases to about 65% post the Mytrah acquisition which is the direction that the power sector is moving towards.

With that kind of capacity, it would be on track to scale 10 GW by the year 2025. This deal will also help them expand their energy operating footprint across resource rich states. Due to its deep understanding of the sector and resource control, JSW Energy is in a position to enhance the operating performance of the portfolio of power assets. However, the company has underlined that Mytrah will not be its last acquisition and it will be on the lookout for more such lucrative opportunities. It is also looking at green hydrogen area.

JSW Energy has some very aggressive and ambitious targets for the future. For example, JSW Energy has a target of 50% reduction in carbon footprint by 2030 and gradually becoming carbon neutral by 2050. JSW Energy will look to enhance power capacity to 10 GW by 2025 and to 20 GW capacity by the year 2030. The share of renewables, which is already 65% currently, will go up further to 85% by the year 2030. The company is on track for its carbon neutral plans and also for its capacity expansion plans for the next 8 years.

JSW Neo Energy , it may be recollected, was formed as a wholly owned subsidiary of JSW Energy. This was part of a re-organisation of businesses which proposed to transfer and own all the renewable and green franchises under one roof. The company is evaluating opportunities to foray into the emerging energy businesses of hydro pumped storage, battery energy storage, green hydrogen. JSW Energy sees itself as an integrated energy products and energy services company in the coming years.

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