Financing Activity in the Indian Solar Sector So Far This Year

In the first three quarters of 2017, the Indian solar sector saw almost $4.2 billion (~₹272 billion) in announced corporate, project funding, and M&A deals, according to the recently released Solar Funding and M&A Report by Mercom Capital Group. By comparison, $2 billion (~₹129 billion) was reported in the same period in 2016.

With approximately 7 GW of solar installed as of Q3 this year, financing activity has been robust in the first three quarters. As of Q3 2017, total corporate funding (VC/PE, Public Market, Debt) raised by Indian solar companies made up almost 34 percent of the global total. In terms of venture capital and private equity investments, Indian companies raised almost 60 percent of the global total.

Corporate Funding as of 9M 2017

VC PE Funding as of 9M 2017

Q3 Highlights

VC Funding

CleanMax Solar, raised $100 million (₹6.5 billion) in equity financing from Warburg Pincus, a New York-based private equity firm.

Debt Financing

Piramal Finance, a subsidiary of Piramal Enterprises, approved additional funding of ₹7 billion (~$107.8 million) to ACME Solar Holdings. The funds were approved under a Flexi Line of Credit, which aims to make a line of funding available to the borrower based on operational projects, and includes the flexibility to draw and repay during the tenure.

Azure Power, is expected to issue and raise around $500 million (~₹32 billion) from the sale of bonds to overseas investors. The bond offering was said to have attracted bids for $1 billion (~₹64.1 billion), twice the size of the offering. JP Morgan, Barclays, and HSBC have acted as arrangers to the sale.

Greenko Energy Holdings, raised $1 billion in green bond offering. The seven-year dollar bond is split across two tranche maturities, comprising $350 million of 4.875 percent senior notes due 2022 and $650 million of 5.25 percent senior notes due 2024. The proceeds will be used to refinance Greenko’s $550M dollar bond due 2019 and invest in various clean energy projects including the newly acquired solar assets from SunEdison India.

Mytrah, announced that Piramal Group has invested approximately $277 million (~₹18 billion) into Mytrah’s Indian subsidiaries in the form of non-convertible debentures (NCDs).

Announced Project Funding Deals

IDFC Alternatives, through its India Infrastructure Fund II, raised ₹2.5 billion (~$39 million) through the sale of non-convertible debentures to an infrastructure debt fund and a financial institution.

IBC SOLAR, a PV system and energy storage company, secured ₹980 million (~$15.3 million) in debt financing from L&T Infrastructure Finance for the construction of a 20 MW solar project located in the Indian state of Odisha.

The International Finance Corporation (IFC), a member of World Bank Group, will provide a $50 million (~₹3.2 billion) loan to Arinsun Clean Energy, a subsidiary of Solenergi Power Private Ltd. (SPPL), backed by Actis, to develop a 250 MW solar project in the Rewa Solar Park in Madhya Pradesh. The IFC plans to issue up to $50 million (~₹3.2 billion) through non-convertible debentures (NCD) and will help mobilize up to $100 million (~₹6.4 billion) from other lenders.

The IFC will also provide a $50 million (~₹3.2 billion) loan to ACME Jaipur Solar Power Private Limited, a wholly-owned subsidiary of ACME Solar, to develop a 250 MW solar project in the Rewa Solar Park in Madhya Pradesh. The IFC plans to issue up to $50 million (~₹3.2 billion) through NCD and will help mobilize up to $100 million (~₹6.4 billion) from other lenders.

Project Acquisitions

IDFC Alternatives’ India Infrastructure Fund II (IIF II), through its wholly-owned subsidiary Vector Green Energy, entered into definitive agreements with First Solar Power India and its affiliates to acquire seven operating solar projects with a total capacity of 190 MW across the Indian states of Andhra Pradesh and Telangana.

Sembcorp Industries, through its wholly-owned subsidiary Sembcorp Utilities, has entered into an agreement to acquire the remaining 28 percent stake in Sembcorp Green Infra (SGI), a wind and solar project developer, from IDFC Private Equity Fund III (IDFC).

Solar Funds and Green Bonds Announced

The Punjab National Bank (PNB) will be financing rooftop solar projects in India through a customized program and will provide up to $500 million (~₹32 billion) in term loans to developers from the Asian Development Bank (ADB).

The Rural Electrification Corporation (REC) of India raised $450 million through the sale of green bonds on the London Stock Exchange (LSE). The fund raised will be utilized to develop solar, wind, and biomass projects, as well as sustainable water and waste management projects.

The IFC has invested $103 million in L&T Infrastructure Finance Company, a wholly-owned subsidiary of L&T Finance Holdings, by subscribing to the first market-approved Green Bond issued by L&T Infrastructure Finance. L&T Infrastructure Finance is expected to utilize the funds to provide loans to solar power projects.

The Indian Renewable Energy Agency (IREDA) has issued a Climate Bonds Certified Masala Green Bond worth $300 million (₹19.5 billion) via a five-year paper. Proceeds of the Certified Climate Bond will go towards financing renewable energy projects across India.