Northern Lights Capital Group,LLC (“Northern Lights”), which provides strategic resources and capital to boutique asset management firms, has invested in Nereus Capital (“Nereus”), a private equity firm targeting renewable energy and clean technology opportunities in India, it was announced today. Terms of the transaction were not disclosed.
Nereus was founded by Jonathan Winer, who previously served as a Director of the D.E. Shaw group’s India private equity practice. Nereus provides growth capital to businesses active in the development, construction and operation of renewable power generation assets in India.
“Among emerging markets, India is one of the most attractive places to deploy private equity capital,” said Tim Carver, Managing Director at Northern Lights.”Nereus brings a unique combination of experience in private equity, project financing, and renewable energy to what is one of the world’s fastest growing energy markets. We are pleased to have the opportunity to invest with this firm and its management team.”
“Northern Lights has an excellent understanding of the private equity business, and brings both investment capital and distribution support to our business,” said Winer. “They appreciate that the evolution of the crowded Indian private equity market benefits investment managers with a focused approach, differentiated teams, and an emphasis on securing uncorrelated excess return.”
One of the world’s fastest growing renewable energy markets, India is expected to invest as much as $30 billion (U.S) in renewable energy over the next decade, with underlying electricity demand growing at about eight percent annually. At the same time, structural inefficiencies within the market have created exceptionally high prices for electricity making many renewable projects economic without government initiatives or substantial leverage.
“The build-‐out of green energy infrastructure is a long-‐term global trend that we believe will continue to create great investment opportunities for private equity,” said Carver. “Within that context, India, with the unique economics of its energy market, can provide excellent risk-‐adjusted return for equity financing of green infrastructure. Going forward, we will continue to look for other similarly compelling situations, both in the U.S. and around the world.”
There have been a number of successful IPP developers for renewable energy in India and some of the larger players include the publicly listed Orient Green Power to private equity backed AuroMira Energy and London stock exchange listed Greenko and KSK Energy Ventures, India among others. There are numerous wind specific IPP developers like CLP India, Acciona Energy. Clenergen, based out of Florida is a recent entrant in the biomass based IPP space, rapidly signing on new projects.
It will be interesting to see if Nereus will be funding RE asset development projects at specific SPV’s along with existing developer(s) or whether it would create a team and build a RE developer company to manage disparate individual assests that are available in the market and go on a brown field and green field expansion model. Either way, this is an exciting space in India where there is a lot of interest being generated and commissioned projects are able to attract excellent valuations.