The Asian Development Bank (ADB) said it has agreed to invest $50 million (Rs 344 crore) in solar energy company Avaada Energy Pvt. Ltd, led by former Welspun Renewables Energy Pvt. Ltd head Vineet Mittal.
The funding will help Avaada Energy scale up its photovoltaic solar energy generation capacity in India, said ADB in a statement.
Avaada Energy was founded in 2017 by Mittal after Welspun Renewables Energy was acquired by Tata Power for $1.4 billion in 2016. The company provides clean-energy products including utility scale, rooftop, and off-grid solar projects in India. The firm has secured power-purchase agreements of about 1,700 megawatts and the company is well-funded to exceed the capacity of two gigawatts with the commitment from ADB, the statement said.
Mittal, chairman, Avaada Energy, said that the investment validates Avaada’s execution track record and commitment in creating a cleaner and sustainable India.
“Supporting renewable energy capacity enhancement by way of debt and equity is a key focus area of ADB’s private sector strategy,” said Mayank Choudhary, principal investment specialist, ADB. The investment will send positive signals to global investors to continue supporting the growth of renewable energy in India, he added.
The investment in Avaada Energy is also expected to contribute to ADB’s goal to provide cumulative climate finance of $80 billion from 2019 to 2030.
Last year, ADB made commitments of new loans and grants totalling $21.6 billion. The development bank has 68 member nations, of which 49 are from the Asia-Pacific.
In the renewable energy space, ADB had made a $50 million equity investment in ReNew Power Ventures in 2014 and exited earlier last year by selling its stake to Canada Pension Plan Investment Board (CPPIB). ADB has also provided debt financing to ReNew Power and has invested in Welspun Renewables.
The government’s ambitious target of adding 175 gigawatts in clean energy by the end of 2022 has triggered a flurry of activity in the space.
Last month, VCCircle reported that Giriraj Renewables Pvt. Ltd, a fully-owned subsidiary of Mittal’s Avaada Power Pvt. Ltd, has raised more than $50 million from German development finance institution Deutsche Investitions- und Entwicklungsgesellschaft (DEG) and Dutch development bank FMO.
VCCircle reported last October that a spate of consolidations could be on the cards in the country’s solar and wind energy industries, with bigger companies acquiring smaller players that may be finding it tough to sustain in a low-tariff environment.