Canadian fund CDPQ opens India office, commits $150M in renewable energy sector

By Anuradha Verma

  • 11 Mar 2016

Canadian institutional fund manager Caisse de dépôt et placement du Québec (CDPQ) on Wednesday said that it has decided to invest $150 million (over Rs 1,000 crore) in the renewable energy sector in India by 2020, according to a statement.

With this, CDPQ has become the latest foreign investor to tap the growing Indian clean energy market. The move comes at a time when the Indian government has scaled up the renewable energy capacity target to 100 gigawatt of solar capacity and 60 gigawatt of wind power by the end of 2022.

“Over the next three to four years, CDPQ will use its commitment to target hydro, solar, wind and geothermal power assets, with investments likely to take the form of select partnerships with leading Indian renewable energy companies,” it said in a statement.

The Canadian fund is one of the biggest investors in wind energy in North America and has financed over 5,400 MW of wind power through its stake in Invenergy. It also owns a major equity stake in London Array, the biggest offshore wind farm, generating 630 MW of wind energy.

“We believe India stands out as an exceptional country to invest in, given the scope and quality of investment opportunities, the potential for strategic partnerships with leading Indian entrepreneurs, and the current government’s intention to pursue essential economic reforms,” said Michael Sabia, president and chief executive officer of CDPQ.

CDPQ has also named former World Bank executive Anita Marangoly George as managing director, South Asia, effective April 1, 2016.

She will be based in Delhi and will head CDPQ India while also developing and monitoring CDPQ’s investments in South Asian markets at large.

Before joining CDPQ India, Anita was senior director of the World Bank Group’s global practice on energy and extractives. Prior to her position at the World Bank, she was director of infrastructure and natural resources at the International Finance Corporation (IFC), the private investment arm of World Bank. Before that, she was head, Siemens Financial Services in India.

CDPQ invests in major financial markets, private equity, infrastructure and real estate across the world. In addition to its presence in South Asia through CDPQ India, CDPQ is present in Montreal, Quebec City, New York, Washington, Mexico City, Paris, Singapore, Sydney and Beijing.

Recently, another Canadian pension fund Canada Pension Plan Investment Board (CPPIB) opened its first office in Mumbai to invest in large companies along with PE firms. The pension fund has already invested around $2 billion in India over the past five years.

Earlier last year, emerging markets-focused private equity major Actis has committed an investment of $230 million (Rs 1,400 crore) to create an India renewable energy platform christened Ostro Energy. It has named Ranjit Gupta as CEO of the platform.

In June, Japanese internet and telecom major SoftBank Corp also joined hands with Taiwanese design and electronics manufacturing services firm Foxconn Technology Group and India's Bharti Enterprises Ltd to form a joint venture for producing renewable energy in the country. The new venture, christened SBG Cleantech Ltd, envisages an investment of around $20 billion over a period of time.

In September, the Union Cabinet also approved the National Offshore Wind Energy Policy. The policy paves the way for setting up of offshore wind power projects. Offshore wind energy is a major source of power in the developed world, especially Europe. The government estimates there is a potential of generating 106 GW power through offshore wind source on Gujarat's coastline alone and another 60 GW on Tamil Nadu's coastline.

Also, Piyush Goyal—minister of state with independent charge for power, coal, new and renewable energy—recently said the government is looking to float a $1 billion private equity fund for the renewable energy sector.

Renewable energy—especially wind and solar power—has attracted a clutch of financial and strategic investors, lured by opportunities in a sector where the government has set ambitious targets to cater to the rising demand for electricity.

In the recent past, there have been some big investments in the space. In October, renewable energy producer ReNew Power Ventures raised fresh capital from new and existing investors, taking the total funds secured so far to $665 million.

The firm raised $265 million (Rs 1,722 crore) in the round led by Abu Dhabi Investment Authority (ADIA), which is one of the two sovereign funds of the UAE and represents the emirate of Abu Dhabi.

Goldman Sachs, the original and now the lead investor, participated in its fourth round of funding in the company through an additional $50 million commitment, taking its total investment to $370 million.

In June, the world's largest renewable energy developer, SunEdison Inc, signed an agreement to buy Morgan Stanley Infrastructure Partners-controlled Continuum Wind Energy Ltd for an undisclosed amount.

Besides, International Finance Corporation, the private sector lending arm of the world Bank, recently decided to facilitate debt funding worth around $177 million in Ostro Energy.

The proposed IFC investment consists of an ‘A’ loan of up to Rs 400 crore (approximately $59 million) besides mobilisation of up to Rs 800 crore (approximately $118 million). 

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