Indian solar sector reported over $1.6 Billion in funding and M&A Transactions in Q1 2017, in announced corporate, project funding and M&A deals, according to the report released by Mercom Capital Group.
The total global corporate funding, including venture capital funding, public market and debt financing into the solar sector in Q1 2017 doubled to $3.2 billion compared to $1.6 billion in Q4 2016. It is noteworthy to mention that the transactions in Indian solar and renewable energy companies held a significant share in the total global funding scenario, in the first three months of 2017 and ruled the global solar funding landscape.
Looking at the large transaction in the Indian sector, ReNew Power was the highest funded company raising VC (venture capital), debt and project funding during the quarter, securing Rs.12.9 billion in funding from JERA (a joint venture between Tokyo Electric Power and Chubu Electric Power, two of Japan's largest utility companies) for a 10 percent stake in the company. Greenko Energy Holdings signed definitive agreements for an equity raise of Rs.10 billion from an affiliate of GIC. Similarly, Hero Future Energies secured Rs 8.1 billion in equity investment from the International Finance Corporation (IFC).
Renew Power raised Rs.30.7 billion through the sale of green energy bonds to overseas investors and secured Rs.25.2 billion financing package from the Asian Development Bank (ADB) for the development of renewable energy projects in India.
On a similar note, Solairedirect, a French solar project developer, through its special purpose vehicle, Solaire Surya Urja, secured around Rs.6.75 billion loan from IDFC for the construction of two solar projects totalling 140 MW at the Bhadra Solar Park in Rajasthan.
In terms of project acquisitions, India Power Green Utility Private Limited (IPGUPL), a wholly owned subsidiary of India Power Corporation Limited, acquired a 49 per cent stakes in PL Sunrays Power and PL Renewable, a wholly owned subsidiary of Punj Lloyd, for an undisclosed amount.
There were 29 solar M&A transactions in Q1 2017 compared to 20 transactions in Q4 2016 and 14 transactions in Q1 2016. Of the 29 total transactions in Q1 2017, 20 involved solar downstream companies.
"Q1 funding levels were up in the solar sector from the 2016 lows, largely due to increased debt financing activity. Corporate funding never reached $3 billion in any of the quarters in 2016. M&A activity was also strong with several large deals. Solar public companies also had a good first quarter," said Raj Prabhu, chief executive, Mercom Capital Group.
With an aim to install 100 GW of solar energy by 2022, the solar sector also saw new renewable energy and solar focussed funds in the Q1 2017 worth Rs 20.3 Billion. This includes the Rs 13.8 Billion, 20-year loan to SBI approved by the European Investment Bank (EIB), to help develop large-scale solar projects in India. Second is the World Bank fund of Rs 6.5 Billion for solar parks development in the country.
However, Residential and commercial solar funds announced in Q1 2017 dropped to $630 million in six deals compared to $1.5 billion in eight deals in Q4 2016.
BW Reporters
Naina Sood is a Economics graduate and has done her post graduation in International economics and Trade. She has deep interests in Indian economy and reforms
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