India Solar M&A – Investments, Mergers & Acquisitions in the Indian Solar Sector

As the Indian solar sector grows from an infancy phase to a relatively more mature phase, one can surely expect investments into the sector from a variety of segments – some of these will surely be from the expected suspects, while many will come from those who have been waiting on the sidelines for things to become more clear.

A large % of these investments will be in greenfield ventures; a minority of these will come through from investments in or acquisitions of existing ventures.

I thought I’d review some of these investments that have happened in the past few months; hopefully, these will provide an idea of how things are shaping up.

The following are the main trends I see in solar investments and M&A, based on what has happened in the past one year.

  • TREND 1 – LARGE ACQUISITIONS – Large power sector players making major acquisitions or investments
  • TREND 2 – SMALL ACQUISITIONS – Small and medium acquisitions
  • TREND 3 – AGGREGATORS ON ACQUISITION SPREE – Aggregators acquiring solar installations of other firms for inorganic growth
  • TREND 4 – LARGE INTERNATIONAL FINANCING – Large IPPs raising significant funding from Indian and international sources
  • TREND 5 – VENTURE FINANCING – Small, innovative solar firms receiving seed funding


TREND 1 – LARGE ACQUISITIONS – Large power sector players making major acquisitions or investments

This is a no-brainer for anyone who has thought a bit about this sector. Solar power, is, you know, power…so isn’t it obvious the majors in the Indian power sector will start making big moves now that solar is moving from a baby market towards adolescence?

Here’s an example of a large acquisitionTata Power acquires Welspun Renewables (Source)

  • The renewables arm of Indian electric utility Tata Power Co Ltd has agreed to take over Welspun Renewables Energy Pvt Ltd in a deal valuing INR 92.5 billion (USD 1.38bn/EUR 1.22bn).
  • Welspun Energy is a subsidiary of the Mumbai-based Welspun Group, a multinational corporation with interests in energy, steel and textiles. Welspun has one of the largest operating solar energy portfolios in India, across 10 states.
    It is the largest transaction in India’s renewable energy industry and it will establish Tata Power as the biggest sector player in the country.
  • Welspun Renewables currently has some 1,140 MW of solar and wind assets in its portfolio, including nearly 1,000 MW of operational plants.
  • On the other hand, the renewables unit of Tata Power presently has 294 MW of facilities in operation and is awaiting a further 500 MW to be transferred to it by its parent through a court process.
  • Tata power claims this as a significant step towards their objective of having non-fossil fuel-based capacity up to 30-40 per cent of total generating capacity
  • Following the takeover of Welspun Renewables, Tata Power Renewable Energy will have 2.3 GW of power generating assets within its portfolio
  • The transaction is pending some consents and is expected to be wrapped up in about two months.
  • Welspun had got institutional funding from across the globe for some of its key projects. General Electric made its first Indian solar energy investment in the company, funding $24 million at a Neemuch, Madhya Pradesh-based 151 Mw project. The Asian Development Bank also made its first equity infusion in India as part of a $50-mn commitment into the company

And another: CLP picked 49% stake in Suzlon’s solar project (Source)

  • CLP India Pvt. Ltd, is one of the largest foreign investors in India’s power sector with a total committed investment of Rs.14,000 Crores. It is listed in the Hong Kong Stock Exchange and is one of the leading investor-owned businesses in Asia.
  • It has acquired a 49% equity stake in SE Solar, a solar power project of wind OEM Suzlon Energy Ltd, for Rs 73.5 crore.
  • SE Solar is building a 100 MW solar power plant at Ventoor in Telengana. The plant is part of a 210 MW project for which Suzlon received letters of interest in January and has signed long-term power purchase agreements (PPAs) with state utilities.
  • Suzlon will be the EPC for this project and will hold 51% stake after the commercial operations begin. CLP has an option to buy-out Suzlon’s stake after 1 year of commercial operation as allowed by the PPA.The project is expected to be commissioned by May 2017 with 80% of debt and 20% equity.


TREND 2 SMALL ACQUISITIONS – Small and medium solar acquisitions

At the other end, a number of small and medium acquisitions are happening at a fast clip as well. Many of these, owing to their small sizes, sail under the radar. Unlike the large acquisitions or investments, which are happening mainly in existing solar power plants, small investments and acquisitions happen for companies at various stages along the solar PV value chain.

Example of a large firm acquiring smaller firms: Suzlon Energy acquires 5 solar companies (Source)

  • Suzlon Energy acquired 5 small solar companies for an undisclosed sum to implement various solar projects across the country including the recently won 70 MW projects in Maharashtra
  • The companies that it acquired are – Gale, Tornado, Abha, Aalok and Shreyas
  • These companies, which have been acquired at face value, do not have any operations or assets currently and have been acquired primarily to be used as SPVs for the proposed solar project
  • The company already has 210 MW of solar power capacity under development, coming from the Telengana solar bid and will be commissioned by March 2017.
  • The company would like to keep its solar operations separated from wind. Keeping solar power operations separate will help investors participate in this business selectively.
  • Suzlon’s wind installations (A total of 9 GW) accounts for 37% of the country’s total wind installations

Example of a small firm acquiring other small firms: Surana Telecom & Power acquired majority stake in Tejas India Solar and Arhyama Energy
(Source 1 & Source 2)

  • Surana Telecom and Power, a telecommunication and power company that also manufactures solar PV modules, was involved in four M&A transactions in the year 2015.
  • It acquired a 51% equity stake each in solar project development companies Tejas India Solar and Arhyama Energy.
    Arhyama Energy Private Limited, was implementing a 10-Mw solar power project in the neighbouring Nalgonda district of Telangana.
  • The total investment outlay of the Arhyama Energy project was estimated at Rs 82.80 crore
    Surana divested its 49% equity stake from a joint venture Radiant Alliance Limited, a solar PV module manufacturer/assembler in Bangladesh.
  • It also had divested 49% equity share in its wholly-owned subsidiary Celestial Solar Solutions, a solar project developer, and sold them to NVR Infrastructure and Services, a solar project developer, for $39,147.


TREND 3 – AGGREGATORS ON AN ACQUISITION SPREE – Aggregators acquiring solar power generation assets of other firms for inorganic growth

The last 2 years has seen in India the emergence of aggregators – firms which through usually the OPEX model, aggregate distributed solar power generating assets that they own, and which provides them with a recurring revenue.

It is obvious that these companies wish to grow really fast. And it is not also surprising that they are one of the most likely to go the acquisition route.

Example: Amplus Energy acquired SunEdison’s Indian Industrial and Commercial Portfolio (Source)

  • Amplus, one of India’s leading solar developers and a portfolio company of I Squared Capital, has acquired the portfolio of commercial and industrial rooftop projects of SunEdison India.
  • Following this acquisition, Amplus will operate over 150 distributed generation and rooftop systems across India.
  • Following the bankruptcy in April, SunEdison is trying to liquidate its assets.
  • In April 2016, Amplus commissioned India’s largest single-location rooftop solar installation for captive use of 4,000 kW for Yamaha Motors
  • Amplus has partnered with leading Indian and multi-national companies like Dominos, Hilton Hotels, Fortis Hospitals and others to meet their sustainability and carbon-reduction objectives.
  • This acquisition will add relationships with global companies including Intel, Amway, Standard Chartered Bank, Whirlpool and Delhi Metro among others for Amplus and will cement its leading position in the commercial and industrial rooftop solar sector in India.
  • Amplus received PE funding of $150 million from New York-based PE firm – I squared Capital in August 2015


TREND 4 – LARGE INTERNATIONAL FINANCING – Large IPPs and other firms raising significant funding from Indian and international sources

On the expansion side, we see a number of investments happening into existing large players, typically IPPs, who are getting significant funds infused into them from Indian and international sources. A question that arises here is the tariffs available for solar power in India, especially where it is sale to utility. While the rates have somewhat stabilized after seeing some crazy lows, these are still hovering close to, or under, Rs 5/kWh.

While some investors might feel that these are very low tariffs, Solar Mango’s calculations show that a Rs 5 or even slightly lower tariff would give project IRRs of 11-13% if the rest of the project components are managed optimally (costs for components, design optimization, decent bank interest rates etc). These are good IRRs for investors in many western countries and countries such as Japan where real interest rates are close to zero or are negative.

Example: Greenko Energy raised $230 mn from GIC, ADIA (Source)

  • Renewable energy firm Greenko Energy Holdings signed an agreement to raise $230 million from an affiliate of Singapore’s sovereign wealth fund GIC and Abu Dhabi investment Authority (ADIA)
  • While ADIA, through one of its wholly-owned entities, will invest $150 million, the remaining will be invested by GIC. (GIC will continue to be the major shareholder of Greenko)
  • The funds is proposed to be utilized through the development of new renewable energy projects, including expansion of existing wind farms
  • Greenko is an owner and operator of renewable energy assets in India, operating a diversified portfolio of more than 1,000 MW of wind and small hydro assets.
  • In October 2014, the energy firm had raised $125 million from Washington-based energy and infrastructure-focused asset management firm EIG Global Energy Partners, through its subsidiary Greenko Mauritius.

Another example: Largest Project Funding in Q1 2016 – received by Renew Power (Source)

  • Renew Power Ventures Pvt Ltd, backed by the Goldman Sachs group, will receive $250 million debt financing as part of an agreement with the Overseas Private Investment Corp (OPIC), the US government’s development finance institution.
    This will be the largest solar project funded by dollar amount in Q1, 2016
  • The funds will be used to construct up to 400 megawatt (MW) of new solar power projects in India across multiple states
    Founded in 2011 by Sumant Sinha, a former chief operating officer at wind turbine maker Suzlon Energy Ltd, ReNew Power has now more than 1,000 MW or 1 gigawatt (GW) of operational capacity from its own wind and solar projects.
  • In October 2015, ReNew raised $265 million in fresh equity from investors, including sovereign wealth fund Abu Dhabi Investment Authority.
  • In its three rounds of funding since starting operations in 2011 (including the October fund raise), ReNew has raised a total of $650 million from its investors.
  • ReNew has signed power purchase agreements (PPAs) for four solar ground mounted projects with a combined capacity of 286 MW in Telangana, and won solar projects in Karnataka and Jharkhand, for which the PPAs are expected to be signed shortly.
  • The IPP has a target to set up over 11GW of combined wind and solar capacity in the next five years.

And yet another example: Applied Solar Technologies raised $40 million from Australian govt’s sovereign wealth fund (Source)

  • In June last year, Delhi-based solar power company Applied Solar Technologies (India) Pvt. Ltd (AST) raised $40 million funding led by Future Fund, the Australian government’s sovereign wealth fund.
  • Other private equity investors Bessemer Venture Partners (BVP), Capricorn Investment Group and World Bank investment arm International Finance Corp. (IFC) also participated in the round.
  • The investment took AST’s overall private equity funding to more than $85 million.
  • In 2009, BVP, the Menlo Park, California-based venture capital firm, invested an undisclosed amount in the company. In 2010, IFC led a $21 million second round of funding; BVP participated in the round. This was followed by a $24.6 million round in 2012 in which BVP, IFC and Skoll Foundation-backed Capricorn Investment Group participated.
  • AST, founded in 2008 by Vinod Agarwal, Kathpalia and Neeraj Saxena, provides off-grid solar power to the telecom and banking sectors.
  • AST currently has distributed solar assets with approximately 4,000 locations commissioned in terrains such as Bihar, Jharkhand, Uttar Pradesh and Rajasthan.


TREND 5 – SEED & VENTURE FINANCING – Small, innovative solar firms receive seed funding

Until a couple of years back, seed or venture funding for solar companies or for that matter, any cleantech firm, was scarce. Not any longer, it appears, going by the pace at which Solar Mango has observed increasing interest in investments.

In the past year alone, we have seen a number of small cleantech firms getting initial rounds of funding, a really welcome beginning. Some of these firms happen to be in solar.

Example: IIT Bombay incubated kWatt Solautions secured $500K funding (Source)

  • kWatt Solutions Pvt. Ltd. (kSPL) which aims to economize renewables, received a funding of $0.5 million from a real estate house in Indore, in May, last year.
  • kSPL was incubated by Society for Innovation and Entrepreneurship (SINE) at the IIT Bombay and began in the year 2013.
  • With the expertise of a strong core team comprising of IIT Bombay graduates – headed by Dr.Chetan Singh Solanki, kSPL offers customized comprehensive solar energy solutions right from design and engineering to installation and maintenance with in-house training for people in the solar industry.
  • kSPL has six verticals: S-Park, S-Life, S-SparQ, S-Entrepreneur, S-Rooftop and S-Lab.
  • In addition to these, kSPL has also developed a range of low cost solar battery chargers under the banner “battery solarizer” ( These chargers boast of fast charging and an inbuilt compass to aid perfect orientation of the solar panel for efficient charging.
  • The funding received is to be utilized towards team building, enhancing business and expanding exponentially in the verticals.

Another example: SunTerrace Energy received seed funding from US-based Sunergy Investors (Source)

  • SunTerrace Energy, a developer of solar energy plants for commercial and industrial customers, had raised an undisclosed amount from US-based fund Sunergy Investors, May last year.
  • Sunergy is a newly-set up family fund that has been investing in US-based companies and is now seeking to invest in Indian solar companies. This is the first investment by the fund in an Indian company.
  • The proceeds will be utilised to develop 500 rooftop solar plant installations aggregating 100 MW across India by 2018.
    The company is also planning to raise another round of funding and is in talks with other investors for the same.
  • SunTerrace was founded in 2014 by Vinay Rustagi and Sanjay Bhasin and specialises in development, financing, installation and operation of rooftop solar energy plants for large scale commercial and industrial clients. Rustagi is an IIM Ahmedabad alumnus, has over one-and-a-half decades of experience in financing energy and infrastructure projects at multinational banks across India and Europe. He is also a joint MD at Bridge To India Energy Pvt Ltd, a solar consulting firm.

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