Deals galore in India’s clean energy space. Attracted by India’s green economy, Canadian pension fund Ontario Municipal Employees’ Retirement System (OMERS) announced its plan to purchase a 19.4% stake in NYSE-listed Azure Power Global Ltd for $219 million from World Bank’s private-sector development arm International Finance Corporation (IFC) and IFC GIF Investment Co.
There is a growing interest in India’s green economy with large pension funds entering this space. Some of the major Canadian investors in India are Canada Pension Plan Investment Board (CPPIB), Caisse de dépôt et placement du Québec (CDPQ) and Brookfield Asset Management.
Mint earlier reported about IFC, German development finance institution Deutsche Investitions- und Entwicklungsgesellschaft (DEG), and Canadian pension fund CDPQ were exploring a sale of their stakes in Azure Power, India’s first renewable energy company to list on the US stock market.
“This agreement to invest in Azure Power demonstrates OMERS strong global interest in high- quality renewable power and energy transition assets, as well as our interest in India as an investment destination and Asia-Pacific more broadly,” said Annesley Wallace, executive vice president and global head of OMERS Infrastructure in a statement issued late on Friday night.
Canadian pension funds have been placing significant clean energy India bets and represent the so-called patient capital, which seeks modest yields over time. India fits the risk profile given that the markets here have matured from the early risk stage. This interest also comes amid a growing focus on environmental, social and governance (ESG) investing.
“The closing of this transaction would mark our second direct infrastructure investment in India, following our 2019 investment in the IndInfravit toll road platform,” added Prateek Maheshwari, managing director, Asia, OMERS Infrastructure in the statement.
With net assets of C$105 billion, OMERS earlier announced an investment of $121 million for a 22.4% stake in IndInfravit Trust, an infrastructure investment trust (InvIT), marking its first infrastructure deal in India.
“The transaction is expected to close in early August,” the statement said.
OMERS Administration Corp. is one of the few pension funds India has granted income tax exemption in May this year for infrastructure investments in India.
India is running the world’s largest clean energy programme to achieve 175 GW of renewable capacity, including 100GW of solar power by 2022. According to the Central Electricity Authority, by 2030, the country’s power requirement would be 817GW, more than half of which would be clean energy, and 280GW would be from solar energy alone.
The deal making activity in India’s green energy space continues unabated. Recently, Thailand’s state-owned energy major PTT Group announced its acquisition of 41.6% stake in Avaada Energy Pvt. Ltd for around $454 million.
