New Delhi: India’s merger and acquisitions (M&A) platform in the renewable energy (RE) space is ripe with still few large developers looking at foreign capital, according to industry experts.
A surge of deals in India has boosted the global M&A activity.
According to experts, Adani’s sale of a minority stake in Adani Green to Total Energies for $2.5 billion was a key reason behind India outpacing US and China in RE M&A activity in the first half of 2021 highlighted in a BNEF report released this month.
“H1 of 2021 saw M&A deals crossing the $3-billion mark with Adani’s deal causing the activity to be higher by about 161 per cent year-on-year,” said Hetal Gandhi, director, CRISIL Research.
She said that while the size of the deal was definitely a key reason for the sharp growth, M&A activity has stayed strong with 2020 witnessing $3.7 billion in such deals.
“We estimate investment requirements to be to the tune of about Rs 1.8 lakh crore over FY22 to FY24. This number is a healthy over 70 per cent increase in investments over the past three years,” said Gandhi.
Animesh Damani, managing partner, Artha Energy Resources, a renewable energy consultancy, said that India has been on the radar for foreign investors for quite some time and the current numbers are definitely skewed because of the large Adani deal.
He added that India will see sustained growth in foreign investment.
“Until now, the power generation side has gotten the largest share of international funding of RE in India. The investment focus will now witness a large diversification into manufacturing and distribution,” said Damani.
Gandhi said that they looked at top 10 players in the segment and it was clear that those players were set to gain market share in the operational base with about 40 per cent pie or about 44 GW out of India’s 100-110 GW by FY23.
“With almost a fourth of this 40 GW having the potential to be monetized, this translates to an expected Rs 20,000 to Rs 25,000 crore or almost 15 per cent of the investment requirements going forward,” she added.
M&A deals enable early investors to make exits and redeploy capital on fresh opportunities. In H1 2021, corporate M&A and private equity buyouts in RE stood at $22.4 billion, up 25 per cent on the previous year’s $17.9 billion globally, according to the BNEF report.
Source: energy.economictimes.indiatimes.com
