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CDC invests $70 million in India’s first dedicated climate change investment fund

CDC invests $70 million in India’s first dedicated climate change investment fund

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CDC Group, the UK’s development finance institution and impact investor, has invested $70 million into the Green Growth Equity Fund (GGEF), India’s first dedicated climate change fund.

The fund is managed by EverSource Capital, a joint venture between Everstone, one of India’s leading private investment groups and Lightsource BP, BP’s renewable energy platform.

GGEF already has strong climate credentials and within the portfolio has several notable investments, including:

  • Radiance, one of India’s leading renewable energy solutions partners to Commercial and Industrial (C&I) customers
  • Greencell Mobility, an e-mobility platform that aims to become the largest pan-India e-MaaS (e-mobility as a service) company
  • Ayana, a utility-scale renewable energy platform with a target of 6+ GW of operating assets
  • EverEnviro, one of India’s leading integrated waste management platform
  • Kathari, which aims to be India’s largest water and wastewater management platform

With CDC’s investment, GGEF will finance the development of between six and eight ‘green infrastructure’ companies in India.

GGEF is different from many funds in that it adopts a ‘platform model’. This means that it sets up a company from scratch in a sector of interest and then grows the platform by making acquisitions of other companies in the sector.

By consolidating lots of smaller companies with similar business models under one roof, the platform can achieve both operational efficiencies and scale, which is key to improving profitability and building a company of sufficient size to attract a buyer. Equally importantly, the ESG standards of investees will be brought up to a common standard across the platform. Synergies, scale, and standards are all key in the nascent sectors that GGEF is targeting.

GGEF’s portfolio of renewable energy, e-mobility, and energy efficiency companies will help to reduce greenhouse gas emissions; its wastewater company will reduce freshwater consumption; and its waste management company will improve the sustainability of natural resources. Furthermore, GGEF, as a pioneer in the green infrastructure space in India, will hopefully play a catalytic effect in the market by proving that investors can earn returns whilst directly contributing to climate objectives.

Srini Nagarajan, Managing Director and Head of Asia at CDC said: “India is an incredible exciting market for renewable energy. Our investment in GGEF will consolidate CDC’s role in India as a staunch supporter of the country’s low carbon future.”

Commenting on this investment by CDC, Dhanpal Jhaveri, CEO, EverSource Capital, and Vice-Chairman, Everstone Group, said, “We are committed to bringing positive climate impact by catalyzing capital for and investing in high growth platforms and businesses. These businesses will contribute to the Indian government’s ambitious climate goals and renewable energy targets. We want to thank CDC for reposing their trust in us. Their fund commitment to our Green Growth Equity Fund is a testament of the hard work put in and the results achieved by the EverSource team in a short time.”

Last month CDC announced an ambition to invest up to $1 billion in climate funding to India over the next five years (2022-2026). The commitment will fund climate mitigating projects and businesses in India and enhance national efforts to align with the Paris agreement.

Over the last four years, CDC has invested over US $1 billion in climate finance across Africa and South Asia. The most recent announcement builds on CDC’s existing $2 billion portfolio in India, further demonstrating the DFI’s commitment to helping mobilise and accelerate climate investment in the country and showcases CDC’s Climate Change Strategy in action.

Source : cdcgroup

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Anand Gupta Editor - EQ Int'l Media Network