RIL’s new energy acquisition of REC Solar Holdings, for an enterprise value of USD 771 mn (Rs. 5,780 cr) was announced over the week end. REC is an energy-efficient Norwegian manufacturer of solar PV cells, being the sole global player, adopting a method reportedly consuming 75% less power than Siemens’s process used by Chinese vendors. However, REC’s basic financials, like even the revenue or operating margin were not disclosed as part of the deal.

REC Solar was a privately-held company, with 79.5% stake owned by China National Bluestar, which was acquired for USD 640 million in 2014, as per some news articles. One wonders, if the technology held by REC is so superior and much sought-after, why is the Chinese parent selling it at just 3% CAGR return after 7 years, Is this another distressed buy by RIL, like many of its previous acquisitions?  

Even the 40% stake proposed to be acquired in Sterling and Wilson, at Rs. 375 per share, is at a 13% discount to Friday’s closing market price of Rs. 435. Rationale for acquiring a less than majority stake remains unclear, that too in a company reporting loss even at the operating level.

Many view these twin acquisitions as competition by India’s most valued company to Adani Green, as also, to make the best of the current ‘ESG’ or ‘clean energy’ investing trend.

But these seem to be too little to move the needle.

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