Private equity and venture capital investments in the country's renewable energy space totalled USD 527 million during the past four years, accounting for nearly a fourth of the total transaction valuations.
“PE,VC players have invested USD 527 million in the country's renewable enrgy sector– 24 per cent of te total transaction value in India for the period January 2005-July 21, 2009,” global consultancy firm Ernst &Young said.
During the four-year period, the merger and acquisition and PE/VC activity in India's renewable energy space stood at USD 2.15 billion. The average deal size stood at USD 69.5 million during the same period.
“The recent years have seen the emergence of several funds with clean tech themes, Venture capital backed development companies are being set up to aggregate assets in India, ” Ernst & Young (Partner and Transactions Advisory Leader for Infrastructure, Real Estate and Government) Kuljit Singh said.
In terms of number of PE/VC deals, there were about 20 such deals between January 2005 and 21 July 2009, out of the total number of transactions which aggregated to 37, the report said, adding the PE/VC players are chasing up the innovative players, while several funds with specific renewable energy mandates have contributed to the transaction activity.
The PE/VC transactions activity peaked in 2008, with USD 301 million worth of investments. However, the activity has slowed down during the current year due to the global financial and credit crisis. Till July this year, there has been PE/VC deals totalling USD 49.1 million.
“In the near time frame, a significant number of assets are expected to change hands with some of the existing project owners refocusing efforts on core areas, raising finances by selling non-core assets and de-leveraging balance sheet in case of assets which are on the balance sheet of the main company,” Singh added.
The top five PE /VC deals during the period include UK's CDC Group Plc on association with other funds acquisition of 6.5 per cent stake in Moser Baer Photo for USD 93.6 million, followed by IDFC Private Equity's acquisition of 17 percent stake in SE Forge for USD 86 million.
The report noted that the country has “immense Renewable Energy (RE) potential, which, if harnessed, can help it control its emissions, without compromising on its economic growth, and also bridge the supply deficit to an extent.”
Some of the significant M&A transaction during the peroid include wind power major Suzlon's USD 1.33 billion acquisition of REPower, which accounts for 61.6 percent of transaction activity in value. Another significant transaction was Gammon India's acquisition of a 50 percent stake in Sofinter for USD 101 million.
Source: Zee News