Solar sector raised over $10 billion in financing during 2017

Solar funding grew last year as approximately 9.6 GW of new solar installations were added to the Indian grid. In 2017, the country’s solar sector logged over $10 billion (~Rs.650 billion) in financing activity, according to Mercom Capital Group’s recently released 2017 Q4 and Annual India Solar Market Update. Financing activity in the sector totalled approximately $4 billion (~Rs.260 billion) in 2016. Project financing in 2017 rose to about $6.4 billion (~Rs.416 billion) on the back of 9.6 GW in solar installations, compared to $3.5 billion (~Rs.228 billion) in financing activity when 4 GW of solar was installed in 2016. Corporate funding (VC/PE, public market, and debt) raised by Indian solar companies in 2017 totalled $3.6 billion (~Rs.235 billion) and accounted for 28 percent of the global total. In terms of venture capital and private equity investments, Indian companies raised over $800 million (~Rs.52 billion) and accounted for 50 percent of the global total.

Q4 2017 highlights

VC/PE funding

ReNew Power Ventures - an Indian renewable energy projectdeveloper - secured ~$200 million (~Rs.13 billion) from the CanadaPension Plan Investment Board in the form of compulsory convertible preferenceshares (convertible debt) that will convert to equity shares at the time of aninitial public offering.

Waaree Energies, an Indian solar module manufacturer and EPCservices provider, raised Rs.1 billion (~$15.6 million) from CentrumFinancial Services, the non-banking finance arm of the Centrum Group and aprivate equity (PE) firm. The funding will be used for its expansion plans.

Indian rooftop solar developer CleanMaxSolar raised a $15 million (~Rs.980 million) investment from theInternational Finance Corporation (IFC) in the form of compulsorily convertibledebentures. The investment marks the first time that IFC has purchased equityshares in a distributed-generation firm.

Debt financing

Azure Power, completed a $500 million (~Rs.32.6billion) green bond offering that is set to mature in 2022. It wasthe first solar green bond to be offered by a company that only has solar powerassets located in India. The funds will be used to refinance existing debt andfor other general corporate expenses. The joint global coordinators for theoffering were Barclays, HSBC, and JP Morgan. They also acted as jointbookrunners with Credit Suisse, Deutsche Bank, and Societe Generale. Latham& Watkins represented the joint coordinators and bookrunners in theoffering.

Greenko raised Rs.30 billion (~$461 million) throughthe sale of onshore rupee-denominated bonds. The 10-year bonds mature in 2027and carry a coupon rate of 8.75 percent. The bonds have a call option afterfive years and pay interest semi-annually. Greenko made the sale through itsspecial purpose vehicles that operate solar projects in India. JP Morgan Chasearranged the offering for Greenko’s SPVs.