May 1 2018 | Industry View

Solar funding rose to more than $10 Billion in 2017

According to Mercom Capital Group’s recently released 2017 Q4 and Annual India Solar Market Update, the Indian solar sector has clocked financing activity to the tune of more than $10 billion (~Rs.650 billion) in 2017. Out of the overall solar financing, the Project funding rose to about $6.4 billion (~Rs.416 billion) in 2017 compared to $4 billion 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.

ReNew Power closed two deals worth $200 million (~Rs.13 billion) each. A host of other companies announced their own deals worth more than $100 million (~Rs.6.5 billion), including Greenko Energy, Hero Future Energies and CleanMax Solar. Private equity deals dominated the increase in corporate funding during 2017.

Debt financing was another area that saw significant year-over-year growth. Most of the debt activity among Indian solar companies came in the form of new bonds. Greenko Energy issued senior notes and bonds to the tune of $1.5 billion (~Rs.98 billion), Azure Power raised over $500 million (~Rs.33 billion) through a bond, and ReNew Power also raised close to $500 million (~Rs.33 billion) via bond issues.

There were no corporate M&A deals in the solar sector during 2017. Project acquisition activity fell by half in terms of dollars compared to 2016. The largest project acquisition deals included the $600 million (~Rs.39 billion) acquisition of Hindustan Power Projects’ 330 MW solar portfolio by the Macquarie Group and the $300 million (~Rs.19.6 billion) acquisition of First Solar’s 190 MW project portfolio by IDFC Alternatives.

Q4 2017 Highlights


ReNew Power Ventures — an Indian renewable energy project developer secured ~$200 million (~Rs.13 billion) from the Canada Pension Plan Investment Board in the form of compulsory convertible preference shares (convertible debt) that will convert to equity shares at the time of an initial public offering.

Waaree Energies, an Indian solar module manufacturer and EPC service provider, raised Rs.1 billion (~$15.6 million) from Centrum Financial Services, the non-banking finance arm of the Centrum Group and a private equity (PE) firm. The funding will be used for its expansion plans. The indian rooftop solar developer CleanMax Solar raised a $15 million (~Rs.980 million) investment from the International Finance Corporation (IFC) in the form of compulsorily convertible debentures. The investment marks the first time that IFC has purchased equity shares in a distributed-generation firm.

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

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

Canadian Solar, a solar project developer and vertically integrated solar module manufacturer, sold its 108 MW grid-connected solar project in the Indian state of Maharashtra. Canadian Solar won the bid to develop the 108 MW grid-connected solar projects by participating in a 450 MW solar tender held by Solar Energy Corporation of India (SECI) under the Viability Gap Funding (VGF) program under the National Solar Mission (NSM) Phase-II, Batch-IV, Tranche-III. The project has a 25-year PPA with SECI.

SEBI approved ACME Solar Holdings’ plans to hold an IPO worth Rs.22,000 million (~$336.86 million). The face value of each equity share is Rs.10 (~$0.15) and they will be up for grabs on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). In total, 2,200 million equity shares will be up for trade. In October 2017, ACME Solar Holdings filed a draft red herring prospectus with SEBI.

“Currently, we are forecasting investments in the solar sector to slow down along with installations in 2018. Uncertainties created by trade cases with possible safeguard and anti-dumping duty imposition will have a direct negative impact on investments unless the government acts fast to resolve these issues in a way that creates confidence among the investment community,” said Raj Prabhu, CEO of Mercom Capital Group.