The first platform will focus on setting up grid-connected solar and wind power parks while the second will cater to the growing commercial and industrial (C&I) segment. These investments will be made from Actis Energy 5 LP fund.
“While Actis plans to make an equity investment of around $600 million for the new firm that will set up grid-connected wind and solar projects, the other new firm that will cater to the C&I segment may see an equity investment of around $250 million,” said one of the two people cited above requesting anonymity.
The person added that these firms will be set up shortly.
Considering the regulatory risks over green energy contracts and their enforcement, investors are increasingly looking at the C&I space as it tends to be insulated from risks such as curtailment in procuring power and tariff-shopping by state-owned distribution companies (discoms).
Green energy companies backed by global investors such as Petroliam Nasional Bhd-owned Amplus Energy Solutions Pvt. Ltd, Royal Dutch Shell-backed Cleantech Solar Energy, Netherlands Development Finance Co.-backed Avaada Energy Pvt. Ltd and Warburg Pincus-backed CleanMax Solar are currently supplying power to third-party as well as captive consumers in India who prefer such suppliers instead of depending on a more expensive electricity grid.
Also, there is considerable interest in the grid-connected clean energy space as well, given marquee deals such as the Goldman Sachs-backed ReNew Power’s proposed merger with Nasdaq-listed special purpose acquisition company (SPAC) RMG Acquisition Corp. II (RMG II), at an enterprise value of around $8 billion. Also, Greenko recently raised $940 million for refinancing through its latest dollar bond issue.
The third and the fourth firm clean energy firms being set up by Actis in India follow its earlier deal wherein it sold Ostro Energy Pvt. Ltd to ReNew Power Ventures in 2018 at an enterprise value of $1.5 billion.
Actis’s renewable energy platform in India—Sprng Energy—has an operational portfolio of 800 megawatts (MW) comprising wind and solar assets. With another 400MW coming online shortly, the PE firm plans to grow Sprng Energy to 2-gigawatt (GW) capacity before it monetizes it.
Some of the other clean energy platforms in India backed by private equity investors include KKR’s Virescent Infrastructure and European alternative asset manager EQT and Singapore’s state investment firm Temasek Holdings Pte.’s O2 Power.
The enthusiasm among global investors stems from India setting a target of 450GW renewable energy capacity by 2030. It currently has an installed renewable energy capacity of 89.63GW, with 49.59GW under execution. Also, ₹4.7 trillion has been invested in the country’s renewable energy space in the past six years, with an expected ₹1 trillion investment opportunity annually till 2030.
Actis, which invests only in emerging markets, has committed $2.1 billion in the Indian market so far spanning the energy, financial services and real estate sectors.
“Actis will also buy operating renewable and road assets through the Actis Long Life Infrastructure Fund, a yield-based fund,” said the first person cited above.
A spokesperson for Actis declined comment.
Actis acquired two solar projects totaling 400MW from Acme Solar Holdings Ltd last year through Actis Long Life Infrastructure Fund. It has bid to acquire Ashoka Concessions Ltd.