Mumbai: Growth market-focused alternative investment firm Actis said India is one of its core investment markets where it has committed nearly a billion in the past 12 months, betting big on a fresh wave on renewable energy and continued advancement in fintech and consumer businesses compared to other emerging market peers.
The UK-based firm, which invests out of its global pool of capital, has invested $450 million in the alternative energy space itself in the past year, and has indicated it will commit more capital to the world’s second most populous nation, where power consumption is expected to outpace growth in GDP. Also, with the government trying to make India the world leader in renewable energy, it makes the country one of the best investment themes among the emerging market economies.
Actis recently raised $2.7 billion to invest in the energy space and is expected to make larger allocation to India, its top official said.
“Over the past 12 months, we have committed $950 million in India and that tells you that India is pretty attractive on a global basis. If you look at the Indian market, and if you look at the shift in the power side — the implosion of power sector from thermal coke and the unavailability of requisite gas to run the power plants — and you combined that with the government’s ambition to be a leader in the renewable space, it’s a fantastic investment opportunity in a space where we are a leader,”said Torbjorn Caesar, senior partner at Actis, told ET in an interview.
“Whatever the growth in GDP, we believe the growth in electricity consumption will grow much higher than that. India is one of the most attractive markets at this point in time,” he said.
Ostro Energy, the renewable energy platform launched by Actis in 2014, was sold to Sumant Sinha-led Renew Power Ventures for an enterprise value of Rs 10,800 crore ($1.66 billion), the biggest M&A deal in the renewables sector, in April this year. From 50MW capacity, Ostro was grown to a producer of $1.1 GW of renewable energy under Actis.
Sprng Energy is another renewable energy platform set up in India by Actis, with a total commitment of $450 million of equity from Actis Energy Fund 4. Actis plans to set up 2GW of renewable energy capacity (solar and wind) through the platform in the next 4-5 years, he said.
Actis, which manages more than $1 billion in India, has started investing in the country since 2004-05.
“The Indian government did whatever it could, especially to encourage renewable energy production in the country. At the federal level, they supported very much in terms of PPA, and auctions, etc. There’s good support from NTPCNSE 0.28 %, too,” said Sanjiv Aggarwal, partner, Actis.
“Challenges remain at the execution level in various states and states like MP does well in execution. Overall, the ease of doing business at renewable space improved very much,” said Aggarwal, who’s also heading Actis’ energy business in Asia.
In February 2017, Solenergi, a 100 per cent Mauritius-based holding company of Sprng Energy Private Limited, participated in the Rewa solar park (Madhya Pradesh) auction and won a 250MW PPA, which is currently under development.
“We have investments in GVK Energy, but we know issues in thermal power are going to continue.”
India has been a mixed bag for Actis, where the firm could score some of its best exits, and at the same time, got badly stuck in some others. Actis had made one of the largest exits in India by selling Paras Pharmaceuticals Ltd. In 2010, it sold its controlling stake in Paras to Reckitt Benckiser Group Plc. Actis, which had acquired 63 per cent of Paras Pharma for $150 million, sold the stake for $726 million.
However, some of its bets in consumer and healthcare such as Nillgiri’s and Sterling Hospital did not do well.
Private equity in India has fallen 6.4 per cent to $14.6 billion in the first nine months of the year, compared with $15.6 billion during the same period last year, according to data compiled by Grant Thoronton.