Thirty-year-old American investment banker Rahul Goswami never thought he’d move from New York to India. Yet he now lives in Mumbai and is betting on Prime Minister Narendra Modi’s agenda for a major expansion of clean energy.Goswami last year set up Greenstone Energy Advisors, a boutique specializing in renewable energy deals in Asia’s third-largest economy. He sees an opportunity in Modi’s push for an unprecedented $200 billion expansion of solar, wind and hydroelectric power by 2022.“This is a story that resonates with international investors,” he said in an interview in Mumbai. “I was doing renewable energy finance in the US. What I realized quickly was that there’s a lack of expertise in this sector—people don’t have this experience here.”
Goswami estimates India may need about $9 billion of capital and equity investment in the next 18 months for a 32% increase in clean-energy capacity. While billionaires such as SoftBank Group Corp.’s Masayoshi Son are pledging to set up renewable plants, it’s an open question how much of that will be implemented and whether Modi will get close to the $200 billion target.For at least the next few years, international joint ventures and investment by overseas pension funds could provide from 20% to 40% of the equity capital India needs, Goswami said.Greenstone advised billionaire Kumar Mangalam Birla’s Aditya Birla Nuvo Ltd on a tie up announced this month with Dubai-based private equity investor The Abraaj Group to add solar power capacity.
“We are currently working on three transactions of the same scale or larger,” Goswami said in the interview on 16 October, adding that his company is also involved in a number of merger and acquisition transactions to sell existing renewable-energy portfolios.Greenstone’s advisory board includes Hemendra Kothari, chairman of asset manager DSP BlackRock Investment Managers Pvt.Tycoons including Son, Foxconn Technology Group’s Terry Gou, Liang Wengen of Sany Group, Chint Group chairman Nan Cunhui and Bharti Enterprises Pvt.’s Sunil Mittal have announced plans for at least $25 billion investment in India’s renewable energy sector.Expected equity returns of 15% are part of the attraction, according to Bharat Bhushan Agrawal, a solar analyst for Bloomberg New Energy Finance in New Delhi.
That’s seen as sufficient compensation for key risks. For instance, India has yet to allow higher distribution charges so that debt-laden electricity utilities can pay for more renewable supplies. Their parlous condition can drag down the credit rating of some projects.Acquiring land to build such things as solar plants or panel factories can also be challenging.
The country remains reliant on coal for about 60% of power generation capacity, part of the reason why it’s one of the world’s biggest polluters. Modi has pledged to slow the rise of greenhouse gases produced by India’s growing economy.Goswami, who worked in New York for Ewing Bemiss and Co., now part of KPMG Corporate Finance LLC, still sees potential despite the challenges in India.