JSW Energy share price pops 8% on inking deal to buy O2Power for $1.47 bn

The uptick in JSW Energy share price came after its arm, JSW Neo, signed a definitive agreement with O2 Power to acquire 4,696 MW of renewable energy (RE) platform for $1.47 billion

JSW Energy share price: JSW Energy shares were in demand on Monday, December 30, 2024, as the scrip climbed as much as 7.70 per cent to hit an intraday high of Rs674 per share on NSE. 

 

The uptick in JSW Energy share price came after its arm, JSW Neo, signed a definitive agreement with O2 Power to acquire 4,696 MW of renewable energy (RE) platform in a $1.47 billion enterprise value deal.

 

In a statement, JSW Energy confirmed that the acquisition involves the purchase of O2 Power Midco Holdings Pte. Ltd and O2 Energy SG Pte. Ltd, which were jointly established by EQT Infrastructure and Temasek. 

 

 

The transaction, subject to approval by the Competition Commission of India (CCI) and other regulatory clearances, is expected to boost JSW Energy’s locked-in generation capacity from 20,012 MW to 24,708 MW. Locked-in capacity includes a mix of installed assets and projects at various stages of development.

 

O2 Power, the renewable energy platform at the centre of the transaction, has 2,259 MW of capacity projected to be operational by June 2025. 

 

The platform includes 1,463 MW currently under construction and an additional 974 MW in the pipeline, with all projects scheduled for commissioning by June 2027. The assets are distributed across seven states in India and feature a blended average tariff of Rs 3.37 per kWh, with a remaining operational life of around 23 years.

 

“We are thrilled to announce the acquisition of O2 Power’s 4.7 GW renewable energy platform which is JSW Energy’s largest acquisition since inception. This landmark acquisition strengthens our positioning as a leading player in India’s energy sector. These high quality assets strengthen our operational footprint across key resource-rich states. It gives me great joy to welcome the experienced management team and employees of O2 power to the JSW Energy family. By combining our strengths, I am confident that we will deliver exceptional value to our stakeholders,” said Sharad Mahendra, joint managing director and CEO of JSW Energy.

 

The company’s acquisition will involve further capital expenditure of Rs 13,000-14,000 crore, which will expand the platform’s full capacity to 4.6 GW in the coming years. 

 

The commercial and industrial (C&I) component of O2 Power’s portfolio, currently at 596 MW, will significantly augment JSW Energy’s C&I capacity to 3,694 MW post-acquisition.

 

According to JSW Energy, the acquisition will play a crucial role in its long-term strategy to increase renewable energy contributions to its portfolio. Currently, the company has an installed capacity of 7,740 MW as of September 2024.

 

The transaction saw PWC serving as the transaction advisor, with legal counsel provided by Khaitan & Co and Herbert Smith. KPMG conducted financial and tax due diligence, while Wind Guard oversaw technical assessments. 

Analysts at Motilal Oswal have valued JSW Energy's core business at 15x its FY27 earnings before interest, tax, depreciation and amortisation (Ebitda), highlighting its robust operational performance and strong market position. The stake in JSW Steel has been assessed at a 25 per cent discount to its current market price. By combining these valuations, the total equity value of JSW Energy translates to a target price (TP) of Rs 810 per share. Additionally, analysts attribute an option value of Rs 60 per share to KSK Mahanadi, which is expected to materialise upon approval of the deal. 

At 9:24 AM, JSW Energy share was trading 6.39 per cent higher at Rs 665.8 per share. In comparison, Nifty50 was trading 0.14 per cent lower at 23,779.65 levels.