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Business deals

Japan's Orix to buy out Indian wind farms from IL&FS

Shadow lender puts 51% share up for sale amid debt crunch

A wind turbine in western India. Orix foresees growth in this sector as the government promotes renewable energy.   © Reuters

TOKYO -- Japanese leasing group Orix has moved to acquire full possession of a jointly held Indian wind farm operation from cash-strapped local partner Infrastructure Leasing & Financial Services.

Orix, which controls a 49% interest in each of seven wind power plants, will buy the remaining 51% stakes from IL&FS, a private-sector nonbank lender. The transaction is set to close in two to three months after passing regulatory reviews.

State-run gas company GAIL emerged as the highest bidder for the business, offering 48 billion rupees ($680 million), according to IL&FS. But Orix exercised its contractual right to match the top bid and acquire the remaining stake.

Orix entered the Indian wind energy business in 2016. The seven plants, in which the Japanese group invested about 20 billion yen ($181 million at current rates) in total, generate 870 megawatts of electricity. The company anticipates growth in the business as India's government promotes renewable energy development.

In addition to the plants, Orix holds a 23.5% stake in IL&FS. But loan defaults at the shadow bank reverberated to Orix's own finances, and the Japanese company booked a loss of 11.5 billion yen associated with IL&FS during the fiscal year ended March.

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