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Actis to invest $500 million in green energy platform Solenergi

According to reports, Private equity fund Actis LLP plans to invest around $500 million in its second green energy platform in India, Solenergi Power Pvt. Ltd, two people aware of the development said.

Solenergi is among the successful bidders for the Rewa solar power project in Madhya Pradesh.

“Actis recently completed the fund round for its fourth fund. Of this, it plans to deploy around $500 million for Solenergi Power,” said one of the two people cited above, requesting anonymity. A second person who also asked not to be identified confirmed this.

A spokesperson for Actis declined to comment.

Actis aims to take advantage of the country’s growing green economy which, in turn, is fuelled by the government’s ambitious clean energy goals. India plans to generate 175 giga watts (GW) of renewable energy by 2022. Of this, 100GW is to come from solar power projects.

Actis invests exclusively in emerging markets with a focus on investments in energy and real estate. Its fourth energy fund, Actis Energy 4 (AE4), raised $2.75 billion in commitments and will invest the funds in Latin America, Africa and Asia. Its earlier energy fund, Actis Energy 3, raised $1.15 billion in 2013. Of the $7.8 billion deployed by Actis, 26% is in the energy sector.

Solenergi Power had placed a aggressive bid of Rs3.30 per kilo-watt hour to win a contract to build 250MW capacity at Rewa. The other successful bidders are Mahindra Renewables Pvt. Ltd and Acme Solar Holdings Pvt. Ltd.

Experts say financial heft helps in placing competitive bids. “The cost of capital is the principal differentiator in determining the viability of solar project bids. Then comes the question about how patient is the capital for returns? Also, the structuring of a project will make a big difference in terms of effective cost of capital. And then is the issue of the type of business model a developer or asset owner has,” said Anish De, partner at the infrastructure and government practice at consulting firm KPMG in India.

Actis was encouraged by the success of its existing Indian renewable energy platform, Ostro Energy, and looking to launch another, Mint reported in January.

“AE4 already has an extremely strong pipeline with $2 billion of deal equity either completed or in late stage including four large scale regional platforms,” Actis said in a 6 March statement.

Ostro Energy and Solenergi are among the energy platforms that Actis has created globally, following Globeleq Meso America in Central America, Zuma Energia in Mexico, Aela Energia in Chile and Atlantic Renovaveis in Brazil.

“Demand for electricity and quality infrastructure in growth markets is high and rising. Energy services are crucial to a country’s economic development. An estimated $10 trillion of investment is required by 2035 across non-OECD (Organisation for Economic Co-operation and Development) countries to meet future demand,” the Actis statement added.

India’s demand for green energy is expected to grow sevenfold in 2035, according to the latest BP Energy Outlook released in January.

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