India: ADB to lend $200m in green energy space, partners IFMR Capital to finance MFIs

Divya, a representative of Simpa Networks, giving a demo and explaining the benefits of Simpa energy solar set to the residents of Sonsa Village, Mathura Uttar Pradesh.

Asian Development Bank (ADB) is pouring money into India’s renewable energy and microfinance sectors, both popular investible themes for venture capital and private equity players.

ADB will lend $200 million to the Indian Renewable Energy Development Agency (IREDA) to support renewable energy projects in the country.

This forms the first tranche of its $500-million project with IREDA for the clean energy finance investment programme that will back wind, biomass, hydropower, solar and cogeneration technologies projects.

The total renewable energy investment programme is around $1 billion and is expected to leverage an estimated $300 million in equity and other investments from sub-project sponsors, and at least $200 million of additional debt funds, according to the release.

ADB’s loan will help the government to scale-up renewable energy infrastructure by facilitating investments in projects that will balance the objectives of growth, climate change, and energy security, said M. Teresa Kho, country director for ADB in India.

“ADB funds can be used to finance up to 50 per cent of the sub-project cost, and the first tranche loan will help IREDA debt finance around 10 or more renewable energy projects, depending on the individual project sizes,” Kho added.

IREDA, a government-owned NBFC, promotes renewable energy investment and this new project will help producing an additional 990 MW renewable energy.

In April this year, IFC had partnered with PTC India Financial Services Ltd (PFS) and Indian Renewable Energy Development Agency Ltd (IREDA) to provide infrastructure financing for renewable energy projects in India.

Since January this year, renewable energy sector has seen several investments and tie-ups. Most recently, renewable energy producer ReNew Power Ventures raised $265 million led by subsidiary of the Abu Dhabi Investment Authority (ADIA) with participation from Goldman Sachs.

The other developments in the space include Italy-based Enel Green Power SpA (EGP) acquiring a majority stake in Bharat Light & Power’s wind and solar subsidiary BLP Energy, Pune-based Simran Wind Project Pvt Ltd, a unit of Techno Electric and Engineering Company Ltd, selling 44.45 MW wind power assets in Tamil Nadu for Rs 215 crore among others.

ADB partners with IFMR Capital to provide financing to MFIs

ADB has also signed an agreement with IndusInd Bank and IFMR Capital to provide financing to micro-finance institutions (MFIs) in India.

ADB and IFMR will cover default risk of selected MFIs at agreed proportions while IndusInd Bank is selected as a local currency lender with initial allocation of up to $20 million of guarantee limits from ADB, the company said in the release.

ADB has to date supported $207 million in local currency loans to 1.23 million individuals, a majority of whom are women. The programme is looking at scaling up to reach over 200,000 households in India, said Hasib Ahmed, head of microfinance in ADB’s private sector operations department.

“MFIs catering to the very lowest income households across the country have access to an alternative source of debt financing and can expand their loan book and outreach. The guarantee allows banks to leverage their risk appetite and significantly increase their lending to MFIs while diversifying their exposure across new geographies and districts,” said Kshama Fernandes, Managing Director & CEO, IFMR Capital.

IFMR Capital has raised over Rs 19,500 crore ($2.99 billion) for its clients until date.

Recently, IFMR raised $25 million from Accion, Leapfrog and Lok Capital.

Also read: Renewable energy developer Asia Green Capital ropes in StanChart as financial advisor for fund raise

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.