Reliance Industries is close to acquiring Europe’s largest solar panel manufacturer, REC Group. The Mukesh Ambani-helmed company is likely to acquire the company for $1-1.2 billion from China National Chemical Corp (ChemChina).

Meanwhile, Mukesh Ambani announced Reliance’s green energy plans and the setting up of the 5,000-acre Dhirubhai Ambani Green Energy Giga Complex in Jamnagar during the company’s 44th annual general meeting in June.

RIL will invest $10 billion in four giga factories. It had recently announced investments of $144 million along with strategic investors Paulson & Co, Bill Gates, and others in energy storage company Ambri Inc.

RIL that has big plans for green energy will be able to access top-notch technology and global manufacturing capabilities through the deal.

RIL is also in talks with global lenders to raise $500-600 million in acquisition financing for the transaction, stated a report in The Economic Times. The rest will be funded through equity.

REC produces silicon material for photovoltaic (PV) applications and multi-crystalline wafers. It also makes solar cells and modules. Due diligence for the deal is almost complete and talks are on to close the transaction.

The report stated that a formal announcement is likely in the next few weeks. RIL has been exploring talks with various independent power producer assets but nothing has followed through.

REC has an annual volume of 1.5 GW. It has made over 40 million solar panels, with generation of 11 GW of power for customers. IKEA, Audi, Tiger Beer are some of its customers.

With manufacturing in Scandinavia and Singapore, it is one of the largest vendors globally.

In 2019, when solar ranked as the world’s top source of new power-generating capacity, about one-third of the polysilicon the industry used to make solar panels came from Xinjiang province, according to Bernreuter Research. Indian companies such as Renew Power and conglomerates Adani and Reliance have all announced major manufacturing projects now.

Formed in 1996, the history of REC Group is one of ups and downs and multiple corporate reorganisations and amalgamations. After a successful IPO in early 2000, its plants and operations had to shut in 2011-12 due to weak market conditions and negative cash flows.

In 2013, REC was split and offshoot Renewable Energy Corporation ASA (REC Silicon) was formed, consisting of the silicon manufacturing facilities in the US.

In 2014, China National Bluestar agreed to acquire REC Solar for $640 million to combine it with a Norwegian asset – solar grade silicon maker Elkem – it picked up in 2011. Bluestar in 2011 had bought Elkem for $2 billion in one of the biggest industrial takeovers by a Chinese group in Europe.

In India, the company has been present for a little over a decade. After starting out as a supplier — to power utilities such as Greenko or scaled projects for the Department of Atomic Energy and Eenadu Group, among others — it pivoted to the rooftop segment for industrial users such as Capgemini, Infosys, BMW and Wonder Cements, among others.

According to industry estimates, before the pandemic, REC reached almost 10% market share in the rooftop commercial and industrial segment.

Over the past few quarters, REC has been marketing its HJT technology panels in India to potential customers. The company says these have an efficiency of 25% against 15-18% offered by utility scale manufacturers, albeit at a cheaper price. “REC doesn’t compete with utility scale players such as Longi, Jinko, or Trina in the Indian market,” said an executive at a rival.

Image source: Business Today.