Japanese conglomerate Mitsui is the frontrunner in an auction for 40% of Philippines-based Terra Solar, according to three sources familiar.

Mitsui’s ties with Terra Solar’s parent group Meralco may help its bid, the sources said without elaborating.

Mitsui, through its local unit Mit-Renewables Philippine Corporation, has a joint venture with Meralco’s renewables arm MGen Renewable Energy (MGreen) – which holds 55.96% of SP New Energy Group – which owns Terra Solar.

The second round of bids is due in August, according to a fourth source. UBS is assisting Terra Solar with the sale, as previously reported.

The proceeds will be used to finance a 3.5 GW solar project with 4 GWh of associated battery storage.

One of the contenders is Actis, which is considering bidding through portfolio company Levanta Renewables, one of the sources and a fifth source said, with the first source familiar adding that Morgan Stanley is advising the London-based infrastructure manager.

An Actis spokesperson told Infralogic that Levanta Renewables is not bidding to acquire a stake in SP New Energy’s Terra Solar Philippines.

Stonepeak-backed Peak Energy also intends to make a bid, a sixth source said. It is working with Standard Chartered to firm up a proposal, the sixth and a seventh source familiar said.

Levanta Renewables declined to comment. SP New Energy, Meralco, Mitsui, Peak Energy, Morgan Stanley, and Standard Chartered did not respond to requests for comment.

The stake is estimated at USD 300m-USD 400m and will be used to fund equity for the solar and battery project – to be built in two phases – a source previously told Infralogic.

Terra Solar requires PHP 200bn (USD 3.6bn) to implement the project in full, sister title Mergermarket previously reported.

Terra Solar plans to deliver 2.5 GW in the first phase by 2026, while construction for the second stage of 1 GW will be completed by 2027.

About 3,500 hectares of land in Nueva Ecija and Bulacan provinces still need to be acquired for the project.

Mitsui’s joint venture with MGreen, PH Renewables operates a 75 MWac solar project in Baras, Rizal. MGreen and Mit-Renewables are also jointly developing a 45 MWac solar project in Cordon, Isabela.