The buzz around cleantech is getting louder in India.
Prithvi Sustainability Innovation and Technology Fund, with a proposed corpus of $150 million, is the newest fund set to make India-centric investments in companies that provide solutions to address air, water and soil contamination. It is promoted by Shankar Rele, CEO of investment advisory ICEStartups.com, and Pramod Sheddy.
Talking to VCCircle, Rele said, they expect a first close of the fund by January 2010 at $100 million and a final close in March. Prithvi is tapping overseas investors including institutions, high networth individuals and hedge funds in the US and UK. The fund is simultaneously in talks with investee companies and will make investments after the first close.
It is looking at emerging areas such as biofuels, air and water pollution management, soil conservation and organic farming, besides renewable energy sectors like solar power and wind, solid waste management, biomass combustion, co-generation systems, rainwater harvesting, waste water treatment and recycling technology. Rele believes that while profitability models have not yet been tested, the space was getting bigger day by day.
Cleantech sector covers knowledge-based products or services that improve operational performance, productivity, or efficiency while reducing costs, inputs, energy consumption, waste, or pollution.
Private equity and Venture capital investments have increased by nearly 10 times in the sector from $30 million in 2006 to $300 million in 2008, according to a report by Ernst & Young. Most funds have cleantech as one of their investment themes in India. Several cleantech focused private equity funds have also established their presence in India. These include the $200 million South Asia Clean Energy Fund, backed by Global Environment Fund and Yes Bank. Aloe Private Equity is also another cleantech focused fund seeking opportunities in India and China.
At the Cleantech Forum XXIV in Delhi, Alok Bhargava, executive director, IL&FS Investment Managers Ltd, said, they were strongly focused on environment and socially inclusive sectors. The firm already has investments worth Rs 300 crore in four companies so far in wind power and waste management projects.
Speaking about deal flow and return on investment, Manoj Gupta, VP, Nexus Venture Partners, said, “today, there are lot more investors chasing less fundable companies, and there is appetite for cleantech investments.” He also stated that it is a new sector and entrepreneurs are still trying to understand the category. “I see a lot of very early stage companies, which in the next 2-3 years will become a lot more fundable,” added Gupta.
Ajay Mehta, chairman of Crossover Advisors Pvt Ltd, said, overseas investors were keen on investing in Indian cleantech space. The problem here is about creating a viable business opportunity for the money that is invested. “There has to be a revenue model, return on investment and an operating structure for the security of assets. That is still missing,” he added.