Warburg Pincus to invest up to $100 mn in CleanMax Solar

In one of the largest overseas investments in the Indian rooftop solar space, Warburg Pincus Llc will invest up to $100 million in CleanMax Solar, the on-site rooftop solar power developer said in a statement on Thursday.

The investment by the US-based private equity firm indicates the deal-making focus on the rooftop solar space given the race to the bottom of solar power tariffs for grid-connected utility-scale projects.

Mint had reported on Warburg Pincus’s investment plans on Thursday.

Confirming that it has secured equity financing of up to $100 million from an affiliate of Warburg Pincus, a statement from the solar power developer said, “CleanMax will use the funds to continue its rapid growth in the rooftop and open access solar power markets in India, while pursuing growth in select international markets (Middle East and South-East Asia), and growing the nascent, yet promising energy storage solutions business.”

The deal will provide dry powder to the firm at a time when financing at low costs has become key to success. CleanMax Solar claims to be India’s largest on-site solar power provider with a combined on-site capacity of around 100 megawatts (MW).

Warburg Pincus’s interest in CleanMax Solar stems from India’s ambitious clean energy target of adding 175 gigawatts (GW) by 2022. Of this, 40GW is to come from rooftop solar projects.

“CleanMax Solar is a leader in the Indian solar rooftop market, providing customers with cost-efficient and environmentally friendly solutions to meet their energy requirements,” Saurabh Agarwal, a Warburg Pincus managing director, said in a statement.

The last big deal in the solar rooftop space was by global infrastructure investment manager I Squared Capital, with an investment in Amplus Energy Solutions Pvt. Ltd. Mint reported on 24 August 2015 about I Squared Capital’s plans to invest $150 million in Amplus, which sets up distributed solar power generation projects in India.

The record low tariff of Rs2.44 per unit arrived at the auction of 500MW capacity at the Bhadla solar park in Rajasthan in May has made investors wary; there are growing concerns that electricity offtake commitments at higher tariffs may not be honoured. The solar energy business in India has seen a significant decline in tariffs from Rs10.95-12.76 per kilowatt hour in 2010-11.