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Global investors are pouring big money into India’s solar sector

AP Photo/Aijaz Rahi
Switching gears.
By Sushma U N
Published Last updated This article is more than 2 years old.

India’s sizzling solar sector is drawing some big money.

Last year, India accounted for nearly 30% of all corporate funding in the sector globally. The Narendra Modi government, which hosted the International Solar Alliance on March 11, is likely to be mighty pleased about this—but the party may not last.

Corporate funding, including private equity (PE) and venture capital (VC) deals, debt funding, and public market funding, for India’s solar sector touched $3.6 billion in 2017, says a report by consulting and research firm Mercom Capital Group.

Of this, Indian companies raised over $800 million in PE funding alone, nearly half the global total.

These were the top five PE/VC funding deals in India last year, led by ReNew Power, a Goldman Sachs-backed clean energy startup founded in 2011:

ReNew Power
$200 million
ReNew Power
$200 million
Greenko Energy
$155 million
Hero Future Energies
$125 million
CleanMax Solar
$100 million

Overall, Indian companies raised over $10 billion, up from around $4 billion in 2016. This includes project financing (funding specific long-term infrastructure projects) of around $6.4 billion, compared to $3.5 billion in 2016.

Debt financing and public market financing through IPOs also grew in 2017, with companies such as Greenko Energy, Azure Power, and ReNew Power issuing debt bonds. Meanwhile, ACME Solar Holdings is slated to hold an IPO worth around $336.86 million. However, fundraising through merger and acquisition deals fell by nearly half last year in India, according to Mercom.

These are India’s top-five solar sector funding deals across categories, including PE/VC funding, debt funding, and project financing:

Bond issue
$650 million
Azure Power
Bond issue
$500 million
ReNew Power
Bond issue
$475 million
Bond issue
$461 million
ReNew Power
Project financing
$390 million

But going forward, funding activity is set to slow down. “Currently, we are forecasting investments in the solar sector to slow down along with installations in 2018,” said Raj Prabhu, Mercom Capital Group’s CEO. “Uncertainties created by trade cases with possible safeguard and anti-dumping duty imposition will have a direct negative impact on investments unless the government acts fast to resolve these issues in a way that creates confidence among the investment community.”

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