New Delhi, Aug. 3 -- The Ontario Municipal Employees Retirement System (OMERS), one of Canada's largest pension funds, has moved to lift its exposure to an Indian infrastructure company five years after its initial investment, VCCircle has gathered.
OMERS, which is looking to trim its stake in the National Stock Exchange via the bourse's planned public offering, is planning to increase its holdings in Indian renewable energy producer Azure Power Global Ltd.
The development comes even as Azure continues to work through the fallout of a governance scandal that wiped out much of its market value, got it thrown off the New York Stock Exchange (NYSE), and ensnared executives on both sides of the cap table in a US bribery probe.
The plan by OMERS Infrastructure, the pension fund's infrastructure investment arm, to raise its stake in the New Delhi-based solar power developer is being reviewed by the Competition Commission of India.
The financial details of the transaction, including the purchase consideration and the exact quantum of the additional equity stake that OMERS may acquire, could not be ascertained.
Emails sent to OMERS Infrastructure and Azure Power did not elicit a response till the time of publishing this story.
OMERS first bought into Azure Power in mid-2021, when it signed a deal to acquire an approximately 19.4% stake in the company from International Finance Corporation (IFC), the private-sector investment arm of the World Bank Group-for about $219 million.
The transaction, which closed in August 2021, gave the pension fund a foothold alongside Azure Power's other big Canadian backer, the Caisse de depot et placement du Quebec (CDPQ)-the Quebec pension and insurance fund manager that has since been rebranded as La Caisse.
OMERS subsequently topped up its holding via a rights offering in January 2022, which raised nearly $250 million and was backstopped by both OMERS and CDPQ.
OMERS currently holds about 23.4% of Azure Power, while La Caisse-which first invested in the company years earlier and became its majority owner in March 2020 after crossing the 50% mark-held roughly 53.4%, with the remainder owned by other shareholders.
Azure Power's ownership has changed hands considerably since it was founded in 2008 by Inderpreet Wadhwa, an Amritsar-born, Silicon Valley-trained entrepreneur who set up the company as India's first private utility-scale solar power producer, starting out with a small plant in Punjab before scaling up into a pan-India developer.
Under Wadhwa, Azure went public on the NYSE in October 2016-at the time, the first listing of an Indian energy company in the US. Wadhwa stepped down as chairman and chief executive in 2019, handing charge to Ranjit Gupta, who joined that July along with chief operating officer Murali Subramanian. With the founder gone, control effectively passed to its institutional shareholders-IFC, La Caisse and, from 2021, OMERS.
In April 2022, Gupta and Subramanian resigned, citing personal reasons. They were succeeded by IndiGrid managing director Harsh Shah, who took charge on July 1, 2022, but lasted barely two months in the job.
Azure announced Shah's abrupt resignation alongside disclosure of a whistleblower complaint alleging procedural irregularities and misconduct by employees at a plant run by one of its subsidiaries. The company's review of the complaint found deviations from safety and quality norms and evidence that certain employees had manipulated project data.
Azure's cratered by as much as 44-46% in a single session. Rupesh Agarwal, who had joined weeks earlier as chief strategy and commercial officer, was named acting CEO. More whistleblower complaints followed, concerning the company's project-commissioning procedures and land-acquisition practices, compounding delays to its US regulatory filings.
Unable to file its annual report on time, Azure Power lost the ability to use shelf registrations with the US Securities and Exchange Commission (SEC) and was eventually delisted from the NYSE in November 2023, pushing its stock onto over-the-counter markets, where it trades today at a fraction of its former value.
Azure Power has, in recent months, been trying to move past the scandals. It has been searching for a joint-venture partner to operate close to 950 MW of its renewable assets, and has revamped its board, with La Caisse nominees taking on the chairmanship and other leadership roles as the pension fund reasserts oversight. OMERS increasing its stake suggests the fund is prepared to deepen its bet on the company's recovery rather than trim its exposure to it.
Published by HT Digital Content Services with permission from VC Circle.