Increasingly more companies are partnering with foreign investors at project level
Global investors are showing immense interest in the Indian renewable energy (RE) space and more partnerships will unlock immense value for the domestic RE ecosystem, Sumant Sinha, chairman and managing director, ReNew told Business Standard. NYSE-listed ReNew recently entered into a partnership with Gentari, the green energy arm of Malaysian energy major Petronas to build 5 Gw of renewable energy projects in 7 years.
“We have a well-developed execution team and there is a market opportunity to expand. We need to partner with people, raise capital and fund these projects. The scale of our operations cannot be funded by us directly. Partnerships like these allow us to continue to execute, meet aspirations of the government, and raise funding from companies such as Gentari, which are also keen to add capacity in India,” Sinha said.
He said while the RE sector was witnessing interest from foreign companies to invest in India and take part in the RE story, execution is not straightforward for them. “So it becomes a win-win as they invest and we execute the projects given our experience and capabilities,” said Sinha.
Increasingly more companies are partnering with foreign investors at project level. This helps them build the projects and sell them to another investor after construction or lock-in period. Sinha believes this capital rotation brings in more value to the ecosystem and also helps companies such as his to build capital.
“Most RE companies build assets and then downsell them to those who want to invest in RE. This is what we are doing as well. It allows us higher velocity of our own capital, develop projects, down sell them, and invest capital in future projects,” Sinha said.
Downselling refers to selling a developed project for raising finance.
“Every time we build assets and sell them, that allows us to build equity value for us as well. As we do not sell them at par value but market value,” he added.
ReNew has signed multiple similar partnerships across its different verticals. In its power transmission projects, Norfund and KLP own 49 per cent stake. In its 400 Mw round-the-clock renewable power projects, Mitsui has picked up 49 per cent stake. For manufacturing green hydrogen, ReNew has partnered with public sector utility Indian Oil.
“We will be doing partnership across the board. As we are an execution-based company, we would create better value as we do more project execution. There is a lot of interest from both foreign financial and strategic investors. It is really driven by the size and attractiveness of the Indian market. What remains is how we as a country and sector work with multilateral agencies to develop products that allow us to catalyse more investment into the sector. This will bring down the cost of financing and widen the financing pool,” Sinha said.
