| $250 mn invested in 11 domestic clean tech firms in 2006. |
| The clean energy business is turning out to be the next big thing for private equity and venture capital investors in India. |
| Investors all over the world are ready to cash in on the clean technology business, thanks to tough postures adopted by the UN and global environment bodies in pushing companies to go environment-friendly. Following the trend, private equity and venture capital funds see big potential for investments in the clean energy sector in India, say industry experts. |
| Last year, venture capital and private equity funds invested over $250 million in 11 clean energy companies. These include Warburg Pincus' $66 million investment in coal benefication company Aryan Coal Benefiction, IDFC Private Equity's $60 million investments in Krishna Godavari Gas Network, Clearwater Capital Partners' $32.80 million investment in Diamond Cables, a power equipment company, and $27.80 million funding by Spinnaker Global Opportunity Fund in IG Petrochemicals, according to Indian Venture Capital Journal. |
| In 2005, $48.9 billion was invested globally in clean energy, up 62 per cent from $30.1 billion in 2004. With total worldwide investment in all parts of the energy industry estimated at around $600 billion per annum, about 9 per cent of the total energy investment is now going into clean energy. More than 50 companies listed on London's AIM are focussed on clean energy. |
| Says Suneel Parasnis, country director, New Ventures India: “One of the major factors inviting investments by the PE players is the global climate change. Everyday, we bear the brunt of this ecological imbalance in forms of severely high temperatures. Carbon emissions are increasing heavily. All this draws the attention of venture capitalists towards cleaner energy.” |
| Some other active venture capital and private equity players in the clean energy sector in the country are the 3i Group, Blackstone, Global Environment Fund, Draper Fisher Jurveston, Reliance India Power Fund, Citigroup Venture Capital and Tano Capital & Tano India Power Fund. GE, the $150 billion US giant, leading Danish wind turbine maker Vestas, Reliance Energy and Suzlon Energy as well as venture capitalists such as AMP Capital, Bessemer Venture Partners and ChrysCapital have also entered this market . |
| Oil demand in India, which grew by over 6 per cent annually during the past decade, has also contributed in a significant way to the country's new outlook towards the non conventional energy sector, say experts. India is also emerging as a serious player in the global carbon credit market. |
| Says Anmol Singh Jaggi, founder director, Gensol Consultants Private: “CDM (Carbon Derivatives Market) has made the renewable energy sector more interesting. In fact, high success rate of India projects has given a boost to CDM in India. It pays to be environment-friendly.” The need for greater investments in the power sector cannot be over stressed. |
| VC and PE firm Bessemer Venture Partners, meanwhile, has invested in Chennai-based Shriram Group's engineering services arm. Shriram EPC will fund its expansion plans for windmills to acquire new technologies and consolidate its position. India is fourth in the world in wind-power generation. The fact that returns on wind energy projects are greater than bonds and govt securities and that it does not involve the risks and volatility of stock markets are added attractions to invest in the sector. |
Source : Business Standard