CleanTech/ Renewable Energy, Finance, Other

Global equity investors turn to India for green projects

According to reports, India is becoming an attractive destination for global private equity investors who are strengthening their funding strategies in the renewable energy space, particularly in emerging markets. This is because opportunities in other markets have plateaued in the past few years.

Industry observers say India’s renewable energy space is witnessing significant uptake from quite a few big North American pension funds and Japanese postal funds.

Raj Prabhu, CEO and Co-founder of Mercom Capital Group, said: “Most of the venture capital funding is going into technology companies. Active project acquirers included investment funds, independent power producers, utilities and pension funds.”

“The global funds are eyeing India because the return on investment in those markets has reached a plateau in the past few years. Cash-rich Japanese postal funds were also eyeing opportunities in India’s renewable energy sector, preferring it over other growth markets like China and Russia given the local complexities in doing business with these two countries,” said Hemant Sahai, Managing Partner of HSA Advocates.

The California Public Employees’ Retirement System (CalPERS) and the Alberta Teachers’ Retirement Fund Board (ATRF) are keen on investing in green projects in India, said an investment banker associated with such projects.

CalPERS is the largest public pension fund in the US with nearly $260 billion in assets. ATRF administers the teachers’ pension plan for all Alberta teachers employed in school jurisdictions and charter schools.

International Energy Agency (IEA) Executive Director Maria van der Hoeven, who was in New Delhi recently, said there are lot of money in the pension funds, which could be routed for investments in clean energy. Though, Hoeven cautioned that if we do not get prices and policies right, the transition to a clean energy system simply will not happen.

“There is a need to create a meaningful carbon price and phasing out of fuel subsidies, which may not happen overnight,” she added.

Between 2011 and early 2013, Sahai’s firm has been involved with four renewable deals, including managing the closure of Singapore-based Equis Funds Group’s (EAF) equity investment in DANS Energy Consulting Pvt Ltd.

Equis’ debut fund with $647 million in capital commitments, invested in Gurgaon’s DANS to an aggregate equity infusion of around $60 million.

Last year, there were about 12 private equity deals valued at about $325 million in Indian renewable projects, according to Frost & Sullivan. The most notable transaction is the $210-million investment in Continuum Wind Energy by Morgan Stanley Infrastructure Partners.

India targets to generate 15 per cent of its power production from solar, wind, hydropower and other renewable sources by 2020.


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