Infrastructure sector sees deals worth US$ 3.49 billion in FY17

New Delhi: The infrastructure sector raised a total of $3.49 billion across 33 transactions in FY17 compared with $2.98 billion raised in 31 transactions in FY16, highlighting the growing number of deals in the sector, according to data from investment bank Equirus Capital.
The majority of private market transactions in the fiscal ended 31 March were led by the power, roads and renewables sectors and, within those, about 88% of the transactions were through the mergers and acquisitions (M&A) route with the remaining 12% through private equity (PE) investments, the data showed.
The value of private equity transactions in FY17 has fallen to $666 million compared with $1.11 billion in FY16, signalling that investors preferred buyouts over PE investments, according to the data.
Capital market activity during FY17 was subdued with only two companies—roads developer Dilip Buildcon Ltd and solar energy firm Azure Power Global Ltd—listing their shares publicly in the Indian and US markets, respectively. In comparison, FY16 saw eight capital market transactions, the data showed.
Deals, particularly in the roads and renewable energy sectors, are set to increase as companies put dozens of assets on sale, Mint reported on 15 January.
The government had in 2015 approved easier exit options to help road developers monetize their operational highway projects two years after the completion of such projects, irrespective of the year in which the project was awarded. This has helped debt-laden Indian infrastructure developers monetize assets and repay creditors. Many renewable energy firms, on the other hand, are evaluating fund-raises and going public.
“The M&A opportunities in the road sector are the highest among various infrastructure sub-sectors with around 88 operational national highway projects totalling 7,192km with a total project cost of Rs693.27 billion and median operational track record of four years,” said Shubham Jain, vice-president and sector head, corporate ratings at ICRA Ltd.
Healthy growth in traffic and decline in interest rates are expected to improve valuations for road projects and accelerate M&A activity in the sector, ICRA said in a report on Wednesday.
“Asset sales in the road sector have picked up over the last 24 months with the relaxation in exit policy. Sponsors in around 20 road assets involving a total cost of Rs123.27 billion have monetised their assets as opposed to around Rs70 billion in the preceding 50 months,” the report said.
Funds such as US-based I Squared Capital, Indian asset manager IDFC Alternatives’ infrastructure fund, Canada’s Brookfield Asset Management, Australia’s Macquarie Group, and the Canadian pension funds Canada Pension Plan Investment Board (CPPIB) and Caisse de Depot et Placement du Quebec (CDPQ) have committed large investments in the sector and are looking to buy assets across roads, thermal power and renewable energy to build their own portfolio in India.

Services growth at 5-month high: PMI

New Delhi: The services sector expanded for a second consecutive month in March, indicating that the predominant sector of the economy has recovered from the demonetisation setback, a private survey released on Thursday has shown.
The widely tracked Nikkei Services Purchasing Managers’ Index (PMI) for services rose to a five-month high of 51.5 points in March, compared to 50.3 in the previous month. A reading above 50 signifies expansion, while one below that shows contraction.
“India’s private sector economy stayed on an upward trajectory during March, benefiting from an upswing in demand and output,” Pollyanna De Lima, economist at IHS Markit and the author of the report, said.
“The country’s rapid recovery from the demonetisation-related downturn was accompanied by job creation and softer inflationary pressures,” De Lima added.
The sector had contracted for three consecutive months till January, with businesses failing to recover from demonetisation. The PMI averaged 49.3 points in the third quarter of the financial year (FY17). It was 49.5 points for the first two months of the fourth quarter of FY17. The sector experienced a back-to-back rise in new business inflows in March. New orders increased at the strongest rate since last October, the report, based on a survey of 400 private sector firms, pointed out.
In order to cope with a higher workload, services providers hired people. While employment increased slightly, the job situation has been the best since July 2015, the survey shows.
“By historical standards, the increases in new work and activity remain relatively mild, though growth is likely to gather speed as we head into the new financial year. This is shown by firms’ willingness to hire additional employees and reinforced by stronger confidence towards the 12-month outlook for output,” De Lima said.
The Nikkei India Composite PMI Output Index, which maps the manufacturing and services sectors, increased to 52.3 in March over 50.7 in February, signalling a rise in private sector activity in the country. Indicating a brighter outlook for the sector, services companies indicated that there would be more activity in the coming 12 months, with the overall degree of optimism at a four-month high. Almost 24 per cent of the panellists signalled a positive sentiment, with better marketing campaigns, stronger demand conditions, and the hope that the goods and services tax regime would be favourable to businesses, the key factors supporting confidence.
Input costs for services firms rose again in March, stretching the duration of inflation to seven months. However, despite accelerating to the fastest over this period, the rate of increase was moderate in the context of historical data, the survey said.

RBI to allow banks to invest in REITs, InvITs

New Delhi: Banks will be allowed to invest in real estate investment trusts (REITs) and infrastructure investment trusts (InvITs), attracting more institutional investors to such assets and expanding the investment scope of banks.
The Reserve Bank of India (RBI) on Thursday proposed to allow banks to invest in such investment trusts following a request from the markets regulator. The central bank will issue detailed guidelines by end May.
Banks, which are currently allowed to invest as much as 20% of their net-owned funds in equity-linked mutual funds, venture capital funds and stocks, may invest in these trusts within this limit.
This will benefit real estate developers firming up plans to launch these trusts.
“The RBI’s decision...is a huge positive. This step now has the potential to usher in a large number of REITs listing in India by offering a safe asset class to invest in and also provide competition to foreign institutions,” said Rajeev Talwar, chief executive of India’s largest real estate developer DLF Ltd. “For banks, it offers an additional important asset class for investing.”
For real estate developers, a pick up in REITs will free up capital that can be used to lower costs, he said.
Markets regulator Securities and Exchange Board of India (Sebi) has been easing rules to make REITs and InvITs more attractive to investors. In January, the markets regulator permitted mutual funds to invest in REITs and InvITs. Mutual funds are permitted to invest only up to 5% of their net asset value in units of a single issuer of such trusts. On 14 March, the insurance regulator also amended guidelines for insurers to invest in these asset classes.
“It is a crucial move because including it will bring in more institutional investors into these trusts, who are looking at relatively stable assets with steady but slightly lower returns. REITs may not be as lucrative for retail investors which is why it is important that owners find more number of institutional investors to participate,” said Abhishek Goenka, partner, PwC in India.
REITs are listed entities that primarily invest in leased office and retail assets, allowing developers to raise funds by selling completed buildings to investors. InvITs are trusts that manage income-generating infrastructure assets, typically offering investors regular yield and a liquid method of investing in infrastructure projects.
India’s REIT market is just about opening up with a number of developer-investors partners acquiring and consolidating rental assets and firming up plans.
DLF, which is in the last leg of selling a 40% stake in its rental portfolio to Singapore sovereign fund GIC Pte, has said it will list its office and retail properties in the form of REIT.
Global private equity firm Blackstone Group Lp, the largest owner of office real estate in the country, may list two separate REITs for its office assets with developer partners. One of them is with Bengaluru-based Embassy Property Developments Pvt. Ltd, which is valued at around Rs22,000 crore with more than 22 million sq. ft of space.
“While this will increase the number of institutional investors like banks coming in, we would also like to engage with retail investors and assure them good returns on the basis of rent income and appreciation,” said Embassy chairman Jitu Virwani. Embassy filed an application seeking approval for its REIT offering from Sebi in October and is expecting a go-ahead soon.
Other companies acquiring and consolidating their office assets and moving towards a REIT structure are RMZ Corp. and K. Raheja Corp.
The Competition Commission of India (CCI) in March approved Blackstone’s plan to acquire a stake in K. Raheja Corp’s commercial office portfolio.
IRB Infrastructure Developers Ltd is planning to launch India’s first InvIT in April, aiming to raise as much as Rs4,300 crore, a 17 March Mint report said.

GST rollout on 1 July likely as Rajya Sabha clears bills

New Delhi:The decks are cleared for the roll-out of the goods and services tax (GST) from 1 July after the Rajya Sabha signed off on all four supporting bills on Thursday without making any amendments.
The fact that they were passed without any changes is important as it reflects political consensus around this ambitious tax reform that aims to unite the country into a common market by removing existing tariff barriers.
The Rajya Sabha passed the four draft laws—the central GST Bill, the integrated GST Bill, the Union territory GST Bill and the GST (Compensation to states) Bill—after they were all tabled as money bills.
With the Lok Sabha passing these bills last week, they will be enacted once they receive the President’s assent.
The passage of these bills in Parliament brightens the prospects of a GST roll-out meeting the 1 July deadline—the only major task now left to be resolved is for the GST council to fit various goods and services into different tax slabs. The GST council is the representative body of the states and the central government and is schedule to meet in Srinagar on 18-19 May to resolve this task.
The bills were passed after a few opposition parties led by the Trinamool Congress failed to push through amendments to the bills in the absence of support from the Congress party.
However, the government did come under criticism over some of the provisions in the bills, including the powers allocated to the GST council, the private ownership of the GST Network, and provisions for anti-profiteering, and search and seizure.
Defending the provisions, finance minister Arun Jaitley said the GST council is an example of deliberative democracy where decisions are taken by consensus.
“What you decide in the council becomes a federal arrangement between the centre and the states and between the states themselves. But Parliament and state assemblies have plenary powers. GST council recommended these bills and they have come for Parliament’s approval,” he said.
“When GST council fixes the rates, every state will have to place it in the budgetary provisions. If assemblies have concerns, then they can bring it to the GST council,” he added.
Jaitley also defended the constitution of the GST network (GSTN) and said the government had no plans to review the existing structure—the centre and the states together hold a stake of 49% with the balance held by private banks and other financial institutions.
“There are billions of vouchers that have to be processed. Will you be able to have the flexibility inside the government to hire the best talent in terms of pay and conditions of service,” Jaitley said. He pointed out that despite GSTN being a private body, “there is a deep and pervasive government control in the management structure.”
In a 14-member board, the government has seven seats, while three belong to the private institutions and the remaining four are independents, Jaitley pointed out.
Earlier in the debate, Sitaram Yechury of the Communist Party of India (Marxist) stressed that Parliament cannot be ignored and bypassed.
“GST council’s decisions should come to us for our consideration and approval,” he said while pressing for the council to be brought under the purview of the Comptroller and Auditor General of India.
He also voted for a rate structure that does not burden the lower and middle class.
Congress MP Kapil Sibal pointed out that the anti-profiteering provision along with search, seizure and arrest powers will increase instances of abuse of powers by the taxmen. At the same time, he pointed out that prices are not dependent only on the tax rates but also factor in other things like input prices and market conditions.
“How will the extent of the price reduction be determined and who will do it?” Sibal said.

IndianOil to invest ~20,000 crore in pipeline network

New Delhi: State-run Indian Oil Corporation is planning to invest at least Rs 20,000 crore to add a 25-million-tonne (mt) pipeline. The project will cover 20 projects in the next four years.
“We are looking to increase our pipeline capacity by 25 mt — including crude oil, liquefied petroleum gas and other petroleum products — from the current 93.7 mt level. This includes investments of Rs 20,000 crore,” said Anish Aggarwal, director (pipelines), IndianOil.
The company’s road map comprises India’s longest LPG pipeline from the Kandla coast in Gujarat to Gorakhpur in eastern Uttar Pradesh. The pipeline covering cities Ahmedabad, Ujjain, Bhopal, Kanpur, Allahabad, Varanasi and Lucknow will carry 3.75 mt a year and cover 2,650 km.
IndianOil has already submitted an expression of interest in this regard to the Petroleum and Natural Gas Regulatory Board (PNGRB), which is expected to wind up a bidding process by the end of May. The company is set to invest about Rs 7,000 crore for this project.
This comes at a time when the company is also in talks to extend GAIL India’s Urjja Ganga pipeline from Gorakhpur to Amlekhganj in a strategic move. The Rs 12,940-crore Urja Ganga project will pass through five states — Uttar Pradesh, Bihar, Jharkhand, West Bengal and Odisha — covering 2,619 km in 49 districts.
The first phase of a natural gas pipeline of 1,200 km from Ennore to Tuticorin with an investment of Rs 4,500 crore is also likely to come up by June 2018.
The other major projects for which the company has initiated tendering process are the Paradip-Hyderabad, Paradip-Haldia and Baroni-Motihari pipelines. “For all these 20 projects, pre-project activities are going on. Talks are also going on with Nepal to form a joint venture with the National Oil Company of Nepal to lay these pipelines,” Aggarwal added.
IOC is also in talks to extend its LPG pipeline project from Raxaul in Bihar to Amlekhgunj in Nepal at a capacity of 1.3 million tonnes per annum at an investment of Rs 275 crore covering about 41 km.
IndianOil and NOC are also tying up to expand Prime Minister Narendra Modi’s pet project Pradhan Mantri Ujjwala Yojana (PMUY) to Nepal. The scheme was launched in May 2016, to provide LPG connections to 50 million below-poverty-line families in three years. The government is providing a support of Rs 1,600 a connection. Under the scheme, India has so far given 20.4 million connections.
IN THE PIPELINE
IndianOil’s pipeline capacity: 93.7 MMT
Capacity to be added in next four years: 25 MMT
Expected investment: Rs 20,000 crore
Biggest project: Gujarat to Gorakhpur LPG pipeline with Rs 7,000 crore investment
Other major projects for which tendering process are initiated: Paradip-Hyderabad, Paradip-Haldia and Baroni-Motihari pipelines

PE investments up 37% in Jan-Mar

Chennai: Private equity investments during the January-March grew 36 per cent to $5.44 billion in 117 deals from $4 billion in 198 deals in the same period a year ago, according to research firm Venture Intelligence.
Flipkart and Ola are back in fund-raising mode in 2017, however at significantly lower valuations. Flipkart has $1 billion in commitments from China’s Tencent and other investors and Ola has received commitments of $330 million from SoftBank and other existing investors.
The number of investments was, however, 41 per cent lower in January-March than in the year-ago period. These figures include venture capital investments but exclude private equity investments in real estate. “Almost $3.6 billion, or two-thirds of the total value of investments during the period, was announced in March,” said Arun Natarajan, chief executive officer of Venture Intelligence.
The research firm expects a few more large deals closed at the end of March to be announced this week. There were 11 private equity investments worth over $100 million in January-March against 12 such transactions in the same period last year. Many of the larger deals involved secondary sales by either promoters or existing investors. Telecom tower firm Bharti Infratel saw parent Bharti Airtel sell a 10.3 per cent stake to KKR and Canadian pension fund CPPIB for $952 million. CPPIB also invested $720 million in infotech firm GlobalLogic, providing an exit to Apax Partners.
True North, formerly India Value Fund, exited Manipal Health through a $215 million stake sale to Temasek and entered a new hospital chain, KIMS Group, through a $200 million investment that provided exits to Ascent Capital and OrbiMed.
Infotech companies accounted for 53 per cent of the private equity investment value during the period, attracting $2.9 billion in 64 transactions. The value of infotech investments was up 106 per cent from $1.4 billion in 115 deals in January-March 2016.
Finance companies attracted $498 million investments in 17 deals in January-March 2017, followed by health care companies at $496 million in eight deals.
With 68 investments, venture capital investment deals in January-March fell 47 per cent from the same period of 2016 to its lowest point since April-June 2014.
Venture capital investment worth $314 million in January-March was 17 per cent lower than the figure in the same period of 2016. The fall was cushioned by a few large growth stage investments. Early stage investment activity — seed capital to Series B deals — fell by as much as 50 per cent from the same period in 2016.
Infotech companies accounted for 74 per cent of the investments by activity, but education (Cue Learn), health care (iGenetics Diagnostics) and microfinance (RGVN NE Microfinance) are grabbing investors’ attention. “Given the nervousness around expensive consumer Internet and mobile bets and the significant capital available with venture capital firms, this is probably the best time for non-consumer focused start-ups to draw investor attention,” remarked Natarajan.
Accel India, Aarin Capital and the Ratan Tata family office, which were active last year, slowed down their pace of investments in January-March. IDG Ventures India stood was an exception, announcing eight investments during the period.

Business confidence hits record high with firms upbeat on economy: CII

New Delhi: The Confederation of Indian Industry (CII) business confidence index (BCI) reached an all-time high of 64.1 during the quarter of January-March 2017 as against 56.5 in the previous quarter, backed by companies being optimistic about the future economic activities and the hope that government reforms will open up various investment opportunities for companies going forward, as per CII. The rise in this index could also be due to a major improvement in the expectations index due to strong business sentiment. The BCI survey included a sample of 200 large, medium, small and micro firms, out of which 63 per cent expect increased sales, 60 per cent expect a rise in new orders, 61.8 per cent expect export orders status quo to be maintained and 65 per cent expect capacity utilisation levels to remain over 75 per cent during January-March 2017.

The Minister of Housing & Urban Poverty Alleviation Shri Venkaiah Naidu today launched 352 housing projects in 53 cities

This is the First largest private investment initiative in affordable housing
The Confederation of Real Estate Developers’ Associations of India (CREDAI) members to invest over Rs.38,000 cr to build over two (2) lakh affordable houses
Over one lakh units to be built in Maharashtra, 41,921 houses in National Capital Region, 28,465 in Gujarat, 7,037 in Karnataka, 6,055 in UP
Cost of construction of these houses to be in the range of Rs.15 lakh to Rs.30 lakh per house
New Delhi: The Minister of Housing & Urban Poverty Alleviation Shri M.Venkaiah Naidu today launched 352 housing projects in 53 cities in 17 States across the country with an investment of over Rs.38,000 cr to build over two lakh (2) houses..
These housing projects to be taken up by the members of Confederation of Real Estate Developers’ Associations of India (CREDAI) across the country is the first major private investments initiative into affordable housing. These projects were launched at a function in Gandhinagar, Gujarat today. As per the details furnished by CREDAI today, the cost of construction of these affordable houses will be in the range of Rs.15 lakh to Rs.30 lakh with average cost of construction coming to Rs.18 lakh per house.
The event was held in the backdrop of several initiatives by the Government of India to promote affordable housing for Economically Weaker Sections, Low and Middle Income Groups including sanction of ‘infrastructure status’ for the housing sector. The new President of the CREDAI (Confederation of Real Estate Developers’ Associations of India) took charge of the confederation at the glittering function attended by the Chief Minister of Gujarat Shri Vijay Rupani, Gujarat Deputy CM Shri Nitinbhai Patel, Gujarat Minister of Urban Development Sh Shankar Chaudhary, outgoing President of CREDAI Sh Gitambar Anand and more than 3000 delegates from across the country.
Speaking on the occasion, Shri Venkaiah Naidu complimented CREDAI and its members for coming forward to invest in affordable housing projects and assured them that his Ministry and Central Nodal Agencies like the National Housing Bank and HUDCO will extend full cooperation in reaching the benefits prescribed under PMAY (Urban) to the beneficiaries who join the projects launched today.
Details of affordable housing projects launched today for implementation are:
State/cities
No of affordable houses to be built
Investment (Cr)
Maharashtra
(Mumbai,Nagpur, Ahmednagar,Jalna, Banm,Nashik, Malegaon,Pune, Satara, Solapur)
1,03,719
15,576
Gujarat
(Ahmedabad, Gandhinagar,Rajkot, Mehsana,
Bharuch, Bhavnagar,Navsari, Modasa,Palanpur,
Swarnakantha,Vadodara, Vapi,Surat)
28,465
9,525
National Capital Region of Delhi
41,921
6,211
Karnataka (Bengaluru, Gulbarga, Hubli)
7,037
1,679
Uttar Pradesh (Agra, Allahabad,Bareily, Jhansi,
Kanpur and Varanasi)
6,055
1,108
Rajasthan(Ajmer, Jaipur,Jodhpur)
4,406
389
West Bengal (Kolkata)
2,955
663
Goa
1,932
464
Telangana (Hyderabad)
1,784
663
Madhya Pradesh (Indore, Ujjain)
1,517
284
Kerala (Trivendrum, Calicut, Kochi, Ernakulam)
1,372
186
Assam (Guwahati)
860
145
Tamil Nadu (Chennai, Coimattore, Tiruchirapalli)
834
145
Odisha (Bhubaneswar)
520
53
Chattisgarh (Raipur)
244
26
Andhra Pradesh (Tirupati)
50
10
Shri Naidu said while Mahatma ensured political freedom for our country, Sardar Patel ensured its unification, Shri Modi is now working on giving content and real meaning to these accomplishments through building a New India.
The Minister said such a New India has no meaning if we don’t ensure houses for all and that too in a specific time frame. He said that the Prime Minister Shri Modi has set the year 2022 as the deadline for roofing all Indians.
Shri Naidu said that within a short span of just 21 months since the launch of PMAY(Urban) in June, 2015, his Ministry has earlier approved construction of 17.73 lakh affordable houses for urban poor with an investment of Rs.95,660 cr in 30 States and Union Territories.. For building these houses, central assistance of Rs.27,879 cr has also been approved, he said.
These approved projects are to be executed with assistance from central and state governments and beneficiary contribution under the four components of PMAY (Urban). Under this urban housing mission, central assistance in the range of Rs.1.00 lakh to Rs.2.35 lakh will be provided to each beneficiary. PMAY (Urban) was launched by Prime Minister Shri Narendra Modi on June 25, 2015.
The Government of India on December 31, 2017 extended the Credit Linked Subsidy Scheme component of PMAY (Urban) to Middle Income Groups with annual incomes in the range of Rs.12 lakh to Rs.18 lakh under which interest subsidy of 4% and 3% on housing loans will be provided. With this, beneficiaries belonging to EWS, LIG and MIG with annual incomes up to Rs.18 lakh have been brought under the ambit of PMAY (Urban) opening up substantial investment opportunities for developers both at the bottom and middle of the pyramid.

BHIM-Aadhaar platform launched, advancing PM Modi's digital push

New Delhi: Prime Minister Narendra Modi on Friday launched the BHIM-Aadhaar platform—a merchant interface linking the unique identification number to the Bharat Interface for Money mobile application—at Nagpur on the 126th birth anniversary of Dr B.R. Ambedkar.
“Like Dr Bhimrao Ambedkar worked to give rights to the common man through the Indian Constitution, one can expect the BHIM app to do similarly great work through the financial system,” said Modi.
The new interface will enable customers to make payments using a merchant’s biometric-enabled device. The merchant merely has to download the BHIM app on his smartphone and link the device to an Aadhaar biometric reader.
“Any citizen without access to smartphones, Internet, debit or credit cards will be able to transact digitally through the BHIM-Aadhaar platform,” a government statement said.
To avail of this service, a customer has to first link his bank account to his Aadhaar number. To make a payment, all he has to do is select the bank’s name and enter the Aadhaar number. His fingerprint will serve as the password to authenticate the transaction.
To start with, no transaction fee will be levied on either the merchants or customers to encourage adoption of the new digital payment service, especially in small towns and rural India.
The government statement said 27 major banks had already tied up with 300,000 merchants for accepting payments using BHIM-Aadhaar. It went on to add that all public sector banks have been instructed to go live with Aadhaar Pay.
In his speech, Modi said that the time is not far when premise-less and paperless banking will become part of people’s lives. He announced two new incentive schemes for the BHIM app—cashback (for merchants) and referral bonus (for customers). The schemes will start from 14 April and end on 14 October, he added.
Under the referral bonus scheme, an individual will earn Rs10 for every new referral made—i.e., educating another person or merchant about the BHIM app and ensuring that they carry out three transactions using the same.
“Even in one day, if you refer around 20 people, you can end up earning Rs200 per day. This can continue for a period of three months,” said Modi.
Under the cashback scheme, merchants can earn up to Rs300 per month for transactions made using BHIM.
An updated version of BHIM (version 1.3) is available on Android and ioS. Several new features have been added to its interface such as new languages, the option to block unwanted collection requests and pay by scanning QR (quick response) codes.
“The new upgrade is aligned to facilitate government’s initiative of launching customer referral bonus and merchant incentive schemes. We have added more regional languages, enhanced user experience and security features for wider acceptance and usage of the BHIM app,” said A.P. Hota, managing director and chief executive of National Payments Corporation of India.
Three new languages—Punjabi, Marathi and Assamese—have gone live on the app. This development was reported earlier by Mint on 24 January (bit.ly/2kbqHky).
According to Ravi Shankar Prasad, Union minister for electronics and information technology, 20 million people have downloaded BHIM so far, and payments worth Rs823 crore have been made. The app was launched on 30 December.
It was one of several measures aimed at promoting digital transactions in the aftermath of the 8 November demonetization of high-value banknotes, which triggered a nationwide cash crunch.

India solar transactions top global fund raise of US$ 3.2 billion so far in 2017: report

Mumbai: Indian renewable energy companies have raised over $1.62 billion during the first quarter of 2017 in transactions ranging from venture capital (VC) funding, debt financing, project funding and merger and acquisitions (M&A), according to data from Mercom Capital Group Llc., a global clean energy consulting firm.
Transactions in Indian solar and renewable energy companies made up for nearly half of the total global funding raised by solar companies around the world in the first three months of 2017. The global solar sector raised total corporate funding of $3.2 billion in the first quarter of 2017—nearly double of $1.6 billion raised in the fourth quarter of 2016, Mercom said in a report on Thursday. This included venture capital funding, public market and debt financing.
The growth in the first quarter is higher by 15% when compared with the total corporate funding of $2.8 billion raised in the first quarter of 2016, the report said. In its study, Mercom tracked 233 new large-scale project announcements worldwide in the first quarter of 2017, totaling 12.7 gigawatt (GW).
Large Indian transactions included ReNew Power Ventures Pvt. Ltd securing $200 million from a joint venture between Tokyo Electric Power and Chubu Electric Power, Greenko Energy Holdings raising $155 million from an affiliate of GIC, and Hero Future Energies securing $125 million from International Finance Corporation (IFC).
ReNew Power also raised $475 million through its subsidiary Neerg Energy by selling green bonds to overseas investors and also secured $390 million in project funding from Asian Development Bank. Welspun Renewables Energy Pvt. Ltd (WREPL), now owned by Tata Power Co. Ltd, raised $176.27 million through issuance of non-convertible debentures on a private placement basis.
Solairedirect, a French solar project developer, through its India unit, secured a $100.4 million loan from IDFC for the construction of its two solar projects, while India Power Green Utility, a subsidiary of India Power, acquired a 49% stake in two solar project companies from Punj Lloyd Infrastructure.
“Q1 funding levels were up in the solar sector from the 2016 lows, largely due to increased debt financing activity. Corporate funding never reached $3 billion in any of the quarters in 2016. M&A activity was also strong with several large deals. Solar public companies also had a good first quarter,” said Raj Prabhu, chief executive, Mercom Capital Group.
Global VC funding (venture capital, private equity, and corporate venture capital) for the solar sector saw a 78% rise in the first quarter of 2017 with $585 million in 22 deals compared to $329 million raised in the same number of deals in the fourth quarter of 2016, the report said. The amount raised was also higher when compared to $406 million raised in 23 deals in the first quarter of 2016.
There were 29 solar M&A transactions in the first quarter of 2017 compared to 20 transactions in the fourth quarter of 2016 and 14 transactions in the first quarter of 2016. About 7.4 GW of solar projects were acquired in the quarter compared to 5 GW in the previous quarter, Mercom said.
However, residential and commercial solar funds dropped to $630 million sequentially from $1.5 billion, the report said.