Warburg Pincus may invest $75 million in CleanMax Solar

In one of the largest overseas investments in the Indian rooftop solar space, US-based private equity firm Warburg Pincus Llc plans to invest around $75 million in CleanMax Solar, an on-site rooftop solar power developer, several people aware of the development have said.

“Warburg Pincus is in talks with CleanMax Solar for a substantive investment,” said one of the people cited above, requesting anonymity. Another person who also did not wish to be identified confirmed the development.

A raft of overseas investors has shown interest in leveraging India’s growing green economy in the off-grid generation space. These include Japanese financial services firm ORIX Corp., which plans to set up a joint venture firm with SUN Renewables for setting up distributed generation solar power projects.

This comes in the backdrop of the government’s plan to add 100 gigawatts (GW) of solar power generation capacity by 2022. Of the overall solar power target, 40 GW is to come from rooftop solar projects.

Warburg Pincus has invested around $460 million across six assets in the infra and energy sectors in India. Mint reported on 16 June about its plans to buy a 43% stake in Tata Technologies Ltd for $360 million. Some of its portfolio companies include Lemon Tree Hotels Ltd, Capital First, AU Financers (India) Ltd, Diligent Power Pvt. Ltd, Ecom Express Pvt. Ltd, Laurus Labs Ltd, and Piramal Realty Pvt. Ltd.

“Warburg has been looking at rooftop solar distributed generation firms. While CleanMax has been doing EPC (engineering, procurement and construction) work, their strength is rooftop solar. The last big deal in the space was done by I Squared Capital,” said a third person, requesting anonymity.

Mint reported on 24 August 2015 about global infrastructure investment manager I Squared Capital’s plans to invest $150 million in Amplus Energy Solutions Pvt. Ltd, which sets up distributed solar power generation projects in India. Queries emailed to the spokespersons for Warburg Pincus and CleanMax Solar remained unanswered.

Declining solar power tariffs have resulted in fewer clean energy deals in the grid-connected space because of concerns that electricity offtake commitments at higher tariffs may not be honoured. This has resulted in interest in distributed generation projects such as rooftop solar. India registered record low tariffs of Rs2.44 per unit at Bhadla in Rajasthan in May.

It has been some time since a large deal has taken place in the Indian green energy space.

Marque deals in the Indian renewable energy sector include Tata Power Co. Ltd buying the entire 1.1 gigawatt renewable energy portfolio of Welspun Energy Ltd for $1.4 billion in 2016 and Hyderabad-based Greenko Energies Pvt. Ltd, backed by Singapore’s sovereign wealth fund GIC Holdings Pte. and Abu Dhabi Investment Authority, acquiring SunEdison’s Indian assets for $392 million last year.

CleanMax Solar claims to be India’s largest on-site solar power provider with a combined on-site capacity of around 80 MW.

“Focused on the corporate and institutional clients in sectors such as automobile, education, pharmaceuticals, food and beverages, information technology, the company develops projects on a turnkey basis, providing power on a per-kWh basis, under long-term power purchase agreements, at rates cheaper than grid tariffs,” the company said in a 25 May statement.