Greenko Energy Raises $230 Million in Fresh Funds

Hyderabad: Clean energy company Greenko Energy Holdings, an affiliate of the Singapore government’s sovereign wealth fund GIC, has raised $230 million in fresh funding from Abu Dhabi Investment Authority and the parent company.

GIC, which acquired a majority stake in Hyderabad-based Greenko Group Plc’s Mauritius entity (Greenko Energy Holdings) for £162.8 million in October is infusing $80 million into the company through one of its affiliates, the company said on Tuesday. GIC will continue to be the majority shareholder.

Abu Dhabi Investment Authority, the government of Abu Dhabi’s investment arm, is investing the remaining $150 million.

Greenko, which has a diversified portfolio of more than 1,000 MW of wind and small hydro assets, also appointed former State Bank of India chairman Om Prakash Bhatt as the company’s non-executive chairman.

The investment in Greenko comes at a time when the Union government has set a target of generating 175 GW through renewable energy by 2022. About 60 GW of this mix would come from wind energy and 100 GW from solar energy, according to the 2015-16 economic survey.

Funds raised from the private equity round will enable Greenko to develop new renewable energy projects, including low-risk expansions of existing wind farms, the company said.

“With our attractive diversified renewable power portfolio, we will continue to execute on our vision to be the most admired independent power producer delivering multiple gigawatts of clean energy at grid parity to support the growth of the Indian economy,” said Anil Kumar Chalamalasetty, chief executive officer of Greenko in a statement.

“We have created a strong and sustainable platform to take advantage of evolving energy market dynamics and strong sector fundamentals accelerated by new government initiatives, and look forward to Mr Bhatt’s guidance as we move forward.”

Apart from increasing installed capacity by developing and building new greenfield assets, Greenko also plans to make “selective” acquisitions. The company plans to increase capacity to 5,000 MW by 2020, Mint reported in March last year.

The country’s renewable energy sector is likely to generate business worth $160 billion over the next five years, a bulk of it from the private sector, according to last year’s economic survey.

Solar and wind power companies in India drew significant investor interest after the Centre scaled up India’s renewable energy targets.

Abu Dhabi Investment Authority also participated in $265 million equity round in Goldman Sachs-backed ReNew Power Ventures Pvt. Ltd. in October.

Sembcorp Renewables, a unit of Singapore’s Sembcorp Industries Ltd, acquired 60% in IDFC Alternative-backed Green Infra Ltd for Singapore $227 million in 2015.

CDC Group Plc has invested $25 million in Green Infra Ltd, one of India’s largest renewable power firms, in 2013.

Canadian pension fund Caisse de dépôt et placement du Québec pledged an investment of $150 million in India’s renewable energy sector.

International Finance Corp (IFC), an arm of the World Bank, has a committed portfolio of around $500 million (including equity and debt) in renewable energy projects in India.

“Greenko is already a majority owned company of a sovereign wealth fund which is adding to its previous funding and bringing along another sovereign fund to invest in the round,” Raj Prabhu, co-founder and chief executive officer of Mercom Capital Group, which tracks renewable energy sector said. “Apart from the Greenko transactions, there are not a lot of sovereign fund investments in this sector.”

Continuum Wind Energy Pvt. Ltd., controlled by private equity fund Morgan Stanley Infrastructure (MSI), is in talks with Canadian and Dutch pension funds to raise funds to complete wind power projects in six Indian states, Mint reported in April.

Hero Future Energies Ltd, is also in talks with CDC and IFC to raise $150 million, Mint reported on 4 April.

Greenko competes with ReNew, Green Infra, Ostro Energy Pvt. Ltd. and Continuum Wind Energy—all backed by strong private equity investors. Morgan Stanley was the sole adviser to Greenko for this transaction.

Yogendra Kalavalapalli; Source: Live Mint: Tue, Jun 07 2016.