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Top green energy banker sees US$ 150 billion in India deals by 2030

IBEF:  July 30, 2021

All roads lead to India's domestic energy players for overseas investors seeking a piece of the country's renewables boom — and the bankers who sit across the table from them.

According to statistics gathered by Bloomberg, Bank of America Corp.'s Mr. Gaurav Singhal leads the busiest team in India's green energy M&A sector over the last 12 months. The largest of the transactions was the American bank advising SoftBank Group Corp. on the sale of its renewables business in India to Adani Green Energy Ltd. for US$ 3.5 billion earlier this year.

Following rumours that discussions with the Canada Pension Plan Investment Board had broken down, the green energy branch of local billionaire Mr. Gautam Adani's empire announced the agreement in May.

Though they were aware of the SB Energy transaction, Adani's company was a late entry, Singhal added. “Being a local player, as well as the fact that some of the SB Energy assets were right door to their own operations, the group had a lot of advantages.”

According to Bloomberg NEF, the acquisition helped India become the world's most active market for renewables M&A in the first half of 2021, and Adani and his fellow billionaire, Mr. Mukesh Ambani, have announced big intentions in the industry.

Foreign purchasers will likely continue to vie for assets; Mr. Singhal estimates that the sector will receive more than US$ 150 billion in equity investment by 2030. However, he claims that the majority of strategic investors from abroad want to support local businesses.

“Some difficulties involving interacting with the federal government may be addressed solely by local partners,” he added. “Foreign investors cannot make that decision on their own.”

Singhal will make that case in person shortly. Bank of America is relocating its top renewable energy investment banker in India to New York in order to capture a larger portion of the nearly US$ 500 billion required to achieve the country's green energy objectives, according to him.

He'll carry a plethora of responsibilities from previous cross-border agreements with him. Thailand's PTT Group's listed power subsidiary, Global Power Synergy Pcl, bought a US$ 453 million interest in local firm Avaada Energy Pvt earlier this month. Orix Corp. of Japan agreed to purchase an approximately 20% interest in Greenko Energy Holdings for US$ 980 million in September.

“The decade I spent in this underappreciated area provided BofA and me a first-mover advantage,” he explained.

Wall Street is a long distance from Agra, the northern city where Singhal used to have to queue for two hours every month to pay the power bill – which was regularly interrupted – two decades ago. India's energy industry, like Singhal's home city of Mumbai, has progressed. As wind and solar projects become more cost-effective and technology improves, coal's market share will decline for the second year in a row in 2020.

This year, the Indian green bond market is growing quickly, with seven offerings denominated in foreign currency. According to figures gathered by Bloomberg, sales have reached an all-time high of US$ 4.1 billion so far this year. Despite its involvement in renewables M&A, Bank of America is a latecomer when it comes to arranging green bonds from Indian issuers, according to the data. According to Singhal, the US lender would try to “fill that gap” in the business.

Local power rules are still in flux, making it difficult for foreign investors to navigate, and some have departed. Taking part in tightly fought tariff bidding battles will make it difficult for foreign businesses to achieve scale, according to Mr. Singhal. He believes that foreign institutional investors would only participate in larger firms that can absorb cash and demonstrate growth, hastening the consolidation process.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.