Low valuations bring back investors in wind energy projects; sector sees 1500 …

June 23, 2013 by  
Filed under Green Energy News

NEW DELHI: More investors are backing wind energy projects as low valuations make the sector attractive for risk capital deals. This year over 1,500 crore has been invested so far and the momentum is expected to continue with deep-pocketed players, such as Goldman Sachs, increasing their exposure in the sector. Earlier this month, a private equity fund run by the Wall Street investment bank invested 760 crore in wind energy firm ReNew Power Pvt Ltd.

“Wind assets are now available at a very good price. The entry-level valuations are quite cheap, and investors can look to recover money within four to five years,” said Arvind Modi, vice-president at Gujarat Venture Finance Ltd. In January, his fund put in 40 crore in a special purpose vehicle of UK-based SITAC Group.

The investment was made out of the Golden Gujarat Growth Fund, a 1,000 crore fund launched in 2011.

ReNew Power, promoted by clean-tech entrepreneur Sumant Sinha, received a first investment of $200 million (about 1,185 crore) from Goldman Sachs in 2011.

Over the past six months, a number of leading risk capital firms, including Goldman Sachs and IDFC, and development finance institutions, such as the Asian Development Bank, have entered into pure equity or equity and debt-linked transactions with wind energy producers.

Valuations have come down sharply over the past 12 months and investors are buying stakes in highly leveraged projects, and replacing external commercial borrowings with equity.

Low Valuations Bring Power Back in Wind Energy; Sector Sees 1,500-cr Investment

“A 1 MW project, which earlier cost between 7 crore and 8 crore, can now be purchased at half that, which should also help greatly in deciding when to go public,” Modi said.

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