French oil and energy group Total has struck a USD 2.5 billion deal with the Adani Group that includes buying 20 per cent of the promoters' stake in Adani Green Energy Ltd (AGEL) and the firm's solar power assets in an effort to build up its presence in the renewable energy sector.
The deal will give Paris-based Total a board seat in the largest solar energy developer in the world, as well as a 50 per cent stake in a 2.35 gigawatts portfolio of operating solar assets, the two firms said in statements.
Total had previously invested in Adani Group's city gas distribution firm, they said.
In a separate filing to the stock exchanges, Adani Green Energy Limited (AGEL) said Total Renewables SAS has bought 25.65 crore shares, or 16.4 per cent stake, in the company.
It acquired the stake from Universal Trade and Investment Ltd -- a promoter group firm.
Promoters including the Adani family held 74.92 per cent of AGEL as of September 2020, stock exchange data showed.
AGEL neither gave the value of the share sale nor the entities that will sell the remainder 4.6 per cent to make up the 20 per cent stake.
AGEL stock ended 0.62 per cent up at Rs 953.45. At current market capitalisation of Rs 1.49 lakh crore, the 20 per cent stake in AGEL is worth close to Rs 30,000 crore but sources indicated the deal was struck at a much lower price.
Total may have paid about USD 2 billion (around Rs 14,600 crore) for the stake and the remaining USD 500 million (about Rs 3,600 crore) for the solar assets.
Neither Adani nor Total gave a break-up of the deal.
Total had in 2018, agreed to buy a 37.4 per cent stake in Adani Gas Ltd -- the city gas distribution firm of the Adani Group, and a 50 per cent stake in the billionaire Gautam Adani-run ports-to-energy conglomerate's under-construction Dhamra LNG project in Odisha.
In its statement, the French giant said the acquisition of a 20 per cent minority interest in Adani Green Energy Limited (AGEL) from Adani Group "marks the deepening partnership between the Adani Group - India's leading infrastructure platform - and Total, in the transition and green energy fields in India." Total is aiming to reduce its dependence on oil and is shifting towards electricity and renewable energy. It is targeting to have 35 gigawatts (GW) of gross renewable energy generation capacity by 2025, from around 7 GW now. It wants to add 10 GW per year afterward.
AGEL is targeting 25 GW of renewable capacity by the same year.
As on date, AGEL has over 14.6 GW of contracted capacity, with an operating capacity of 3 GW and another 3 GW under construction and 8.6 GW under development.
Adani Group Chairman Gautam Adani had last year signalled room for promoters to dilute their stake in AGEL, saying global energy producers, including Total, were interested in investing to expand their renewable portfolios.
"Our entry into AGEL is a major milestone in our strategy in the renewable energy business in India put in place by both parties," Total CEO and Chairman Patrick Pouyanne said.
"Given the size of the market, India is the right place to put into action our energy transition strategy based on two pillars: renewables and natural gas," he added.
Total said the investment in AGEL is another step in the strategic alliance between Adani Group and the French firm, which covers investments in LNG terminals, gas utility business, and renewable assets across India.
"This is in line with the commitment of both Adani and Total to be leading participants in the sustainable economy of the future and help India in its quest for the development of renewable energy," the statement said.
AGEL started in 2015 with the world's largest single-location solar power project located at Kamuthi, Tamil Nadu (648 MW) and has come a long way to be the No.1 global solar power generation asset.
"We have a shared vision of developing renewable power at affordable prices to enable a sustainable energy transformation in India. We look forward to working together towards delivering India's vision for 450 GW renewable energy by 2030," Gautam Adani said.
As part of its ambition to get to net-zero by 2050, Total is building a portfolio of activities in renewables and electricity that could account for up to 40 per cent of its sales by 2050.
At the end of 2020, Total's gross power generation capacity worldwide was around 12 GW, including close to 7 GW of renewable energy. With the objective of reaching 35 GW of production capacity from renewable sources by 2025, Total will continue to expand its business to become one of the world leaders in renewable energies.