GIC, ADIA invest additional $329m in India’s Greenko Energy

Photo: Greenko website

In one of the largest funding rounds by an Indian clean energy producer, sovereign wealth funds GIC Holdings Pte Ltd and Abu Dhabi Investment Authority (ADIA) have agreed to invest an additional $329 million in Greenko Energy Holdings.

This fresh tranche follows the previous funding round of $495 million in June by these sovereign wealth funds in Greenko Energy Holdings to build power storage projects. With multilateral and bilateral agencies, as well as sovereign wealth funds, not showing interest in businesses that contribute to climate change, the two sovereign funds have now put a total of $2.20 billion in Greenko (including this fresh round), founded by Mahesh Kolli and Anil Kumar Chalamalasetty.

“Greenko Energy Holdings (“Greenko”), one of India’s leading renewable energy companies, has announced the signing of definitive agreements for a primary equity raising of US$ 824 million, which includes a previously announced $495 million raising towards IREP (Integrated Renewable Energy Project) Projects Equity commitment, from an affiliate of GIC and by the Abu Dhabi Investment Authority (“ADIA”),” Greenko Group said in a statement on Thursday.

This investment comes in the backdrop of a power sector package, comprising a new tariff policy and structural reforms in the offing, announced by finance minister Nirmala Sitharaman in her budget speech last week.

While GIC and ADIA hold 61% and 15%, respectively, in Greenko, founders Mahesh Kolli and Anil Kumar Chalamalasetty own the remaining 24%. Greenko has a total renewable energy operational capacity of 4.2 gigawatt (GW), with 7GW under construction.

“The new capital will be used to fund its business plan, which includes the capex of IREP projects and also other opportunistic and valuable acquisitions., Greenko has also issued warrants to its founders, which will bring in additional equity for the growth of the company when they are exercised over coming months. With these proposed investments the company’s business plan will be fully funded for the next two years,” the statement added.

With the global energy landscape rapidly evolving, there has been a growing overseas interest in India’s green energy space. A case in point being Malaysian government-owned Tenaga Nasional Berhad exploring the option of setting up a renewable energy platform in India, Mint reported on Wednesday.

“Indian energy markets are transitioning from deficit markets to demand-driven contracts, requiring reliable, flexible and cost competitive energy. Greenko is focused on building Integrated renewable energy assets with storage to address these markets by competing with conventional energy assets like thermal in quality, quantity and cost,” said Anil Chalamalasetty, managing director and chief executive officer, Greenko in the statement.

India is ranked fourth and fifth, globally, in installed capacities for wind and solar power, respectively. With competitive solar bids and India’s wind energy sector having transitioned from a feed-in tariff regime, which ensures a fixed price for wind power producers, to tariff-based competitive auctions, obtaining finance at the lowest cost has become key.

This investment also comes at a time when India’s emerging green economy will require additional investments of around $80 billion till 2022, growing more than threefold to $250 billion during 2023-30, according to the Economic survey 2019 presented last week.

Last year, Greenko bought Orange Renewable from Singapore’s AT Capital Group at an enterprise value of $1 billion. With the newly elected Narendra Modi government articulating its vision for reliable and uninterrupted power supply to households in its second term, Hyderabad-based Greenko’s focus on building integrated renewable energy assets with storage will help it provide clean energy during peak grid demand. Storage is key to providing on-demand electricity from wind and solar projects.

This comes in the backdrop of India becoming one of the top renewable producers globally with ambitious capacity expansion plans. The country has an installed renewable energy capacity of about 80 GW and is running the world’s largest renewable energy programme with plans to achieve 175GW by 2022 and 500GW by 2030, as part of its climate commitments.

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