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India fails to figure among top global solar deals; investments drying

PB Jayakumar     October 10, 2019

While  global corporate funding in the global solar market witnessed a 34 per cent year-on-year increase at $9 billion in the first nine months of 2019 against $6.7 billion during the same period in 2018, investments in the Indian solar sector is witnessing a slowdown.  

The global VC funding (venture capital, private equity, and corporate venture capital) in the solar sector was 13 per cent higher at $1 billion in the first nine months of 2019 compared to $889 million raised during the same period in 2018. Global VC/PE funding alone in Q3 2019 totaled $208 million in 11 deals, said a recent report of Mercom Capital Group, a global clean energy communications and consulting firm.

As against this global trend, big investments in India's solar sector is drying up with no Indian deal figuring among the top transactions during the year, say industry sources. In 2018, investments in the Indian solar sector stood at $9.8 billion, a decline of 15 per cent compared to $11.5 billion in 2017 as the sector was grappling with issues such as GST, imposition of safeguard duty on solar cells and modules from China and Malaysia and delay in solar auctions. Concerns such as slowdown in tendering projects, issues in raising capital and finishing projects ans state utilities demanding reworking of power purchase agreements have affected investor confidence over the past few months, say sources.

In the third quarter, Shapoorji Pallonji-backed Sterling & Wilson Solar, a provider of solar EPC solution, went for an initial public offer (IPO) to raise about  $406 million to debut on the BSE. Renewable energy company SunEdison Infrastructure had acquired Megamic Electronics, a solar monitoring solutions provider for around 10 million. Similarly, Nocca Robotics, which makes water-less solar project cleaning robot for utility scale solar projects, could raise $1.67 million from the early-stage IAN Fund, with participation from angel investors of Indian Angel Network (IAN). India's largest wind and solar power company ReNew Power had raised about $300 million through a rights issue in June, and another $350 million from debt funding early this year.  

In September, Adani Transmission had acquired a special purpose vehicle of Bikaner-Khetri Transmission Limited (BKTL) in Rajasthan from  PFC Consulting through a bidding process. In October, Adani Green Energy's two subsidiaries raised about $362.5 million from green bonds to repay their foreign currency loans and rupee borrowings. Major deals in the sector have also dried up this year in India, except acquisitions, for example, Adani Green Energy's acquisition of Essel Group's 205 MW solar assets worth over Rs 1200 crore.

"In Q3 2019, over $100 million in venture funding went to technology and manufacturing-focussed companies, which is rare. Five IPOs and over billion dollars in securitisation deals so far this year have been the highlights," says Raj Prabhu, CEO of Mercom Capital Group.

Although India's solar power generation grew to 23.7 billion units (BU) in the first half of 2019, the growth rate of solar power generation had declined to 32 per cent, compared to 86 per cent growth recorded in the first half of 2018. This was due to the decreased pace of solar capacity addition in the first half of 2019 to 3.2 GW, compared to over 5 GW capacity added during the same period of 2018. India is the third largest solar energy market in the world after the US and China.

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