MUMBAI: Billionaire industrialist Sajjan Jindal is separating the renewable power business from the publicly listed JSW Energy. His $13-billion JSW Group is the latest to announce restructuring moves after Anil Agarwal’s Vedanta and Mukesh Ambani’s Reliance Industries (RIL). The pattern in India, dominated by conglomerates, mirrors the restructuring initiatives of global powerhouses like General Electric, Toshiba and Johnson & Johnson.
Jindal’s new renewable power company will inherit all the assets and liabilities of the business and will unlock value for shareholders in the future. Vedanta plans to split into three companies, while RIL seeks to spin off its gasifier business into a separate entity. “It looks like everyone wants to emulate Adani Group stocks and also ride on the IPO craze,” said InGovern founder Shriram Subramanian. “Many of these promoters will come with OFS (offer for sale) at high valuations,” he added.
Jindal targets to have a power generation capacity of 20 gigawatts by the end of this decade. Of this, he wants the share of green energy to be 85%, up from the current 30%. The new renewable power company, JSW Energy Neo, will house existing as well as upcoming units in solar, wind and hydrogen.
Ahmedabad-based Adani Group had undertaken a restructuring exercise in 2015 to split ports, power, transmission, alternate energy and incubation initiatives into separate entities. Over the last six years, Adani created billions in value, said HDFC Securities research head (retail) Deepak Jasani. The latest restructuring moves by Indian conglomerates follows their recovery from a slump triggered by the pandemic.
Separating the business from the main company will sharpen focus and can tailor capital according to requirements. It seems that investors no longer like diversified structures. Earlier, the thinking was that if one business is in a downcycle, then the other would make up for the contraction. There would be some amount of cross-subsidisation. Investors are now of the view that the value of the whole is less than the sum of the parts. Therefore, businesses need to be segregated, Institutional Investor Advisory Services founder Amit Tandon told a business news channel.
Jindal’s new renewable power company will inherit all the assets and liabilities of the business and will unlock value for shareholders in the future. Vedanta plans to split into three companies, while RIL seeks to spin off its gasifier business into a separate entity. “It looks like everyone wants to emulate Adani Group stocks and also ride on the IPO craze,” said InGovern founder Shriram Subramanian. “Many of these promoters will come with OFS (offer for sale) at high valuations,” he added.
Jindal targets to have a power generation capacity of 20 gigawatts by the end of this decade. Of this, he wants the share of green energy to be 85%, up from the current 30%. The new renewable power company, JSW Energy Neo, will house existing as well as upcoming units in solar, wind and hydrogen.
Ahmedabad-based Adani Group had undertaken a restructuring exercise in 2015 to split ports, power, transmission, alternate energy and incubation initiatives into separate entities. Over the last six years, Adani created billions in value, said HDFC Securities research head (retail) Deepak Jasani. The latest restructuring moves by Indian conglomerates follows their recovery from a slump triggered by the pandemic.
Separating the business from the main company will sharpen focus and can tailor capital according to requirements. It seems that investors no longer like diversified structures. Earlier, the thinking was that if one business is in a downcycle, then the other would make up for the contraction. There would be some amount of cross-subsidisation. Investors are now of the view that the value of the whole is less than the sum of the parts. Therefore, businesses need to be segregated, Institutional Investor Advisory Services founder Amit Tandon told a business news channel.
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