Mumbai: Pennar Industries Ltd (PIL), a Hyderabad-based engineering company, on Monday said its board has agreed to sell a stake in its subsidiary Pennar Renewables Pvt. Ltd to Greenko Solar Energy Pvt. Ltd, the solar energy arm of Greenko Energy Holdings.

Pennar Industries, established in 1988, is engaged in manufacturing precision engineering products such as cold rolled steel strips, precision tubes, railway coaches, pre-engineered building systems, sheet metal components and road safety systems.

According to a statement issued by Pennar Industries, once the transaction is completed, its consolidated debt will be reduced by Rs101 crore. “The proceeds from the sale of transaction will be used by the company to expand its product base and addressable markets," the statement added.

Pennar Industries’ consolidated long-term and short-term debt stood at Rs296.5 crore as of 31 March.

Financial details of the transaction were not disclosed.

On Monday, shares of Pennar Industries surged 8.76% to close at Rs53.4 on BSE, while the benchmark Sensex rose 0.75% to 31,449.03 points.

The acquisition of Pennar Renewables is part of the growing trend of mergers and acquisitions in the Indian renewable energy sector.

Greenko itself has been an aggressive acquirer.

On 14 March, Mint reported that the Greenko group is looking to acquire hydro and wind power producer Bhoruka Power Corp. Ltd’s renewable energy portfolio of 310 megawatts (MW).

Last year, Greenko acquired the Indian assets of US solar power firm SunEdison for $392 million. Greenko was also one of the suitors to acquire 1.1 gigawatts (GW) of wind and solar assets of Welspun Renewables, which were eventually acquired by Tata Power Renewable Energy for around $1.4 billion.

Apart from strategic investors such as Greenko, the sector has also seen strong M&A action driven by financial investors.

Last month, IDFC Alternatives, the asset management arm of the infrastructure-focused lender, announced the acquisition of American solar panel maker First Solar’s 200MW of renewable power assets.

In April, Mint reported that infrastructure fund of Australia’s Macquarie Group Ltd had agreed to buy about 330MW of operational solar assets from power producer Hindustan Powerprojects Pvt. Ltd for an enterprise value of $600 million.

Financial investors Actis Llp and Equis Energy are also looking to sell their respective Indian renewable platforms—Ostro Energy Pvt. Ltd, and Energon and Energon Soleq.

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