In an attempt to tap a growing desire among private equity (PE) and venture capital (VC) investors to invest in companies in the clean technology and clean energy business, investment bankers and a few other firms are creating arms that will focus on such companies. The smaller banks see this as a way to differentiate themselves in an increasingly competitive financial services market.
Companies targeting such deals include Clean Technology AustralAsia Pty Ltd, Mape Advisory Group Pvt. Ltd, New Ventures India, Jefferies & Co. Inc., Rabo India Finance Pvt. Ltd, and Yes Bank Ltd. This trend is in line with international ones, with investment banks such as London’s Climate Change Capital seeking to tap the growing interest in this sector. Most of these organizations in India are in the process of creating practices or increasing their capacity, and none have yet emerged as the active source for PE investors.
PE and VC investors welcome any help in getting more information and access to companies in the so-called clean tech space. The challenge for intermediaries will be in building the expertise to find viable, fundable companies in this sector, and matching them with investors who have an appetite for small deals, which will dominate the space for the next year according to industry experts. The more mature companies that seek (or sought) investments such as Suzlon Energy Ltd and Moser Baer Photo Voltaic Inc. are very few.
Clean technology-focused organizations Clean Technology AustralAsia and New Ventures are in the process of determining which service lines to take on across mentoring, placement, fund advisory and capital raising, and have draft agreements out for creating partnerships with other banks.
Yes Bank is set to be the only one developing a dedicated investment bank for clean energy and social ventures, microfinance and carbon trading, and maybe the only one actively sourcing small deals.
“These projects are very young, so it does not fall into the mainstream investment banking sector,” said Vivek Mehra, Yes Bank’s corporate finance private equity and social investment bank country head. Global banks Jefferies and Rabo have groups specialized in this area across countries that have a presence here.