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Green Infra in talks to raise $200 million

According to reports, renewable energy producer Green Infra Ltd is in talks with investors to raise $200 million (around Rs.1100 crore) to fund ongoing projects as well as expansion.

This funding is separate from the $50 million debt facility that IDFC Private Equity-backed Green Infra may receive from the International Finance Corporation (IFC), the private sector investment arm of the World Bank, to build two solar power plants in the country.

IFC is considering extending the facility over the next two years, according to a proposal dated 29 June on IFC’s website.

“We have ambitious growth plans that will require additional capital. The $50 million debt is separate from our fund raising plans,” said Shivanand Nimbargi, managing director and chief executive of Green Infra.

“We are talking to various people…, not just private equity investors, is all I can say right now,” he said.

No investment bank has been mandated for the fund raising, he added.

Green Infra’s short term plans include making it a 5,000 megawatts (MW) renewable energy company by 2015 with operating assets of 3,000MW plus 2,000MW in development. It will largely be through wind energy, followed by hydro, solar and biomass.

The firm’s current installed capacity is 240 MW and has a pipeline of 800 MW under development.

The company is working on off-grid applications and solutions for telecom towers. It is also looking at repowering of wind turbines, for which it is awaiting a clear policy.

“In addition, we are looking at offshore wind turbines and large solar thermal plants,” Nimbargi said.

According to a report by Pew Environment Group, among the G-20 countries, India’s clean energy sector was the second-fastest growing in 2011. It attracted investments worth $10.2 billion, an increase of 54% over 2010, with wind power leading the way by attracting $4.6 billion in investments.

Electricity demand has continuously outstripped production in the country with a peak energy shortage of around 12.7% in 2009-10, according to the ministry of new and renewable energy.

Policy uncertainty and issues such as a shortage of coal have reduced the appetite of investors for non-renewable energy producers.

Private equity investment in the power generation sector fell to $42 million across four deals in January-June comapred with $244 million across 10 transactions in the same period last year.

Renewable energy producers still remain attractive for investors, said Vikram Utamsingh, partner, transactions and restructuring and private equity advisory, KPMG India. “The interest is more for wind assets and a bit less for solar as these businesses tend to be more capital-intensive,” he said.

Investments are not without their own share of difficulties. The question is can an investor find a team that can execute a project efficiently, said Sunil Jain, founder partner at Sprout Capital Advisors LLP, an investment bank.

“There are a lot of people with ambitious plans but have not done 20% to 30% of what they aspired for. The challenge is in finding a high quality management team,” he said. Jain said more than half a dozen deals are under negotiation in the renewable energy space currently.

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