SoftBank marks retreat from global solar ambitions with Adani deal

The renewables arm of Indian tycoon Gautam Adani’s conglomerate said it planned to acquire SoftBank’s energy unit at a valuation of $3.5bn, marking a significant retreat for Masayoshi Son’s global solar ambitions.

The announcement on Wednesday comes after talks over the unit between the Japanese group and the Canada Pension Plan Investment Board collapsed. Adani has made a series of acquisitions over the past year to deepen the company’s renewables portfolio and shift away from coal.

Shares in Adani Green Energy, the Indian conglomerate’s green energy business, have risen more than 10 per cent this week on speculation of a deal.

“The renewable energy platform that we are building will lay the foundation for attracting several other global industries that are increasingly looking to reduce their carbon footprint,” Adani said in a statement.

Adani, one of India’s most powerful tycoons, is playing a pivotal role in Prime Minister Narendra Modi’s renewable energy target of the country reaching 450 gigawatts by 2030. But global investors are concerned about the position of Adani, whose wealth has doubled to more than $65bn in the past year, as one of India’s largest thermal power producers.

The sale of SB Energy India marks a reversal of Son’s aggressive bet on renewable energy as SoftBank has shifted its strategy to invest in technology start-ups through its two $130bn Vision Funds.

“As SoftBank Group continues our transition to a global investment holding company focused on accelerating the deployment of artificial intelligence, we believe now is the right time to bring in the Adani Group to help drive the next phase of SB Energy India’s growth,” Son said in a statement.

SoftBank’s billionaire founder became one of the most outspoken advocates for renewable energy following the 2011 Fukushima nuclear disaster. In 2015, he pledged to lead a $20bn investment in the Indian solar power industry and three years later unveiled a $200bn project with Saudi Arabia to create the world’s largest solar power generation project in the kingdom by 2030.

While the company remains an investor in solar power farms across Japan, its targets elsewhere have been largely unmet with its energy unit only contracting the development of 5GW in India. Its mega-project with Saudi Arabia has also been downsized, although SoftBank said the latest deal in India would not affect its commitment to solar projects in Japan.

India’s progress in solar energy had been slowed by policy confusion and land acquisition issues even before the risks posed by Covid-19.

Experts say Adani has proved adept at navigating India’s complex regulatory environment compared with its rivals.

“They can leverage their capital and connections to ensure delivery of SoftBank’s huge pipeline of projects,” said Tim Buckley, an analyst at the Institute for Energy Economics and Financial Analysis in Australia. “They are playing a major aggregator role.”