IFC to invest $125 million in Hero Future Energies

Hero Future Energies has a pipeline of 1.1GW of wind projects till 2018-19 and expects to secure over 500MW in solar projects under state and Central bidding by 2015-16


A screen grab of Hero Future Energies website
A screen grab of Hero Future Energies website

Mumbai: International Finance Corp. (IFC), the private sector investment arm of the World Bank, said on Tuesday it will invest $125 million (Rs.840 crore) in Hero Future Energies Ltd, the renewable energy arm of the Hero Group.

Established in 2012, Hero Future Energies is present in nearly 10 states of India. The company is currently developing 150 megawatts (MW) in wind power assets and about 90MW in solar power assets.

It has a pipeline of 1.1GW of wind projects till 2018-19 and expects to secure more than 500MW in solar projects under state and central bidding by 2015-16. In the rooftop solar segment, the company has plans to implement 100-200MW in projects by 2018-19.

Hero Future Energies plans to commission capacity of more than 1GW in the next 12 months. IFC, together with IFC Global Infrastructure Fund, will invest up to $125 million of equity and proceeds will be used to fund the construction of solar and wind power plants, read the company’s statement.

Hero Future Energies is in talks with IFC and CDC Group Plc, a development finance institution owned by the UK government, to raise $150 million (about Rs.1,000 crore), Mint reported in April. Hero Future Energies aims to use the funds to expand its capacity to 2GW by 2020, the report said.

In February, Hero Future Energies had raised Rs.300 crore through so-called certified climate bonds to expand its wind portfolio. Climate bonds or green bonds are an asset class linked to climate change solutions.

IFC has a committed portfolio of around $500 million (including equity and debt) in renewable energy projects in India.

India’s renewable energy sector has attracted strong interest from foreign funds after the government sharpened its focus on clean energy.

In October last year, Goldman Sachs-backed ReNew Power Ventures Pvt. Ltd raised $265 million in fresh equity from investors, including sovereign wealth fund Abu Dhabi Investment Authority. On 22 March, ReNew Power said the Overseas Private Investment Corp., the US government’s development finance institution, will provide debt financing of up to $250 million for its solar projects.

On 9 March, Canadian pension fund Caisse de dépôt et placement du Québec pledged an investment of $150 million in India’s renewable energy sector. The fund said it plans to invest the amount over the next three to four years, targeting hydro, solar, wind and geothermal power assets. It also intends to partner with select renewable energy companies in India.

In 2015, Sembcorp Renewables, a unit of Singapore’s Sembcorp Industries Ltd, acquired 60% in IDFC Alternatives Ltd-backed Green Infra Ltd for Singapore $227 million.

Prime Minister Narendra Modi is banking on renewables to fight climate change and has set an ambitious target of increasing India’s clean energy capacity by more than five-fold to 175GW by 2022.

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