CDC Group, a U.K. government-owned development finance institution, has invested $70 million in the Green Growth Equity Fund (GGEF), India’s climate change fund. The fund is managed by Eversource Capital, a joint venture between private equity fund Everstone Group and Lightsource bp, British Petroleum’s renewable energy platform.
GGEF maintains that it already has strong climate credentials and has several investments in its portfolio. The portfolio includes Radiance, a renewable energy solution for commercial and industrial customers; e-mobility platform Greencell Mobility; utility-scale renewable energy platform Ayana; Integrated waste management platform Everenviro; and wastewater management platform Kathari.
“India is a fascinating market for renewable energy. Our investment in GGEF will consolidate CDC’s role in India as a staunch supporter of the country’s low carbon future,” said Srini Nagarajan, Managing Director and Head of Asia, CDC Group.
GGEF will use the investment to finance the development of ‘green infrastructure’ companies in India. GGEF claims it is different from many funds in that it adopts a ‘platform model.’ This means that the fund sets up a company from scratch in a sector of interest and then grows the platform by acquiring other companies in the sector.
According to GGEF, the platform can achieve operational efficiencies and scale by consolidating many smaller companies with similar business models under one roof. This business model is key to improving profitability and building a company of sufficient size to attract a buyer. The environmental, social, and (corporate) governance (ESG) standards of investees will also be brought to a common standard across the platform.
Dhanpal Jhaveri, Chief Executive, Eversource Capital and Vice President, Everstone Group, said, “We are committed to bringing positive climate impact by catalyzing capital for and investing in high growth platforms and businesses. These businesses will contribute to the Indian government’s ambitious climate goals and renewable energy targets. We want to thank CDC for reposing their trust in us. Their fund commitment to our Green Growth Equity Fund is a testament of the hard work put in and the results achieved by the EverSource team in a short time.”
Last month, the CDC announced its ambition to invest up to $1 billion in climate funding to India over the next five years. This commitment will fund climate mitigation projects and businesses and enhance national efforts to align with the Paris Agreement. Over the past four years, CDC has invested more than $1 billion in climate finance across Africa and South Asia. CDC already has a $2 billion portfolio in the country.
Earlier, CDC Group had announced a $30 million facility to Tata Cleantech Capital Limited (TCCL) through its directed green lending facility. This first-of-its-kind facility will enable Tata Cleantech Capital to offer loans to businesses that focus on e-mobility solutions and water and energy efficiency to help mitigate climate change.
CDC has invested in Bengaluru-based Ayana Renewable Power, which was launched in January 2018. It had initially committed to invest $100 million into the company. In December 2020, the CDC announced equity funding of $70 million (~₹5.1 billion) in Ayana.