Adani, Tata, Mahindra, Hero rake in close to $4 billion for their renewables businesses

There is no stopping the flow of money into India’s renewable energy story. The large business houses are quite pleased to bring aboard high-quality investors, who are equally comfortable with those with a long-term approach to the business.

Just consider the list of top business groups who have been in the news. It has names such as Adani Green Energy, Tata Power, Mahindra Susten, and most recently, Hero Future Energies. Those tracking the sector are clear that this is only the beginning of more to follow. “India will become the world’s capital for renewable energy. It makes sense for investors since we have a large population and consequently, a large user base,” thinks Deven Choksey, MD, K R Choksey Securities.

A closer look at the investors is quite interesting and it is dominated by the large funds. Mahesh Singhi, Founder & MD, Singhi Advisors, an M&A advisory firm, says investors feel comfortable with a platform. “Going with a large corporate group indicates a strategic approach to the business and that is what drives investors,” he points out. Referring to the case of Adani Green Energy, Singhi thinks Total’s decision to cut the cheque is in line with its objective of having a complete portfolio with a healthy chunk of green energy. 

“The deal goes beyond money and is completely strategic. For a lot of investors globally, the thrust on green capital follows the commitment made on ESG.” To Choksey, there is no constraint when it comes to raising capital. “There will continue to be a lot of interest in solar for a long time. It’s just that the big players will take away a large part of the money initially,” he explains.

If it is solar now, the future is equally intriguing and the way things are shaping up, it will be a question of time before hydrogen sees the moolah coming in. Here, both Adani and Reliance have announced big-ticket investments, though it is well accepted that hydrogen is a long-gestation project. Choksey points out that India is blessed with water and that is a huge plus. To him, a player like Reliance is unlikely to look at raising money now. 

“Their approach has been to incubate a business and grow it with their own capital till it reaches a certain size. It is only beyond that when the process of looking at investments will kick in, with the objective being to always retain majority control.” In terms of investors evincing interest – be it the funds or strategic players – it is question of one deal going through. “That will be enough to open the floodgates,” maintains Singhi.  

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