NuPower looks to raise $300 million in two tranches
Firm seeks investments from pension funds in Canada, Australia, US; expects to seal the deal in the next 6-8 months
Mumbai: Wind energy producer NuPower Renewables Pvt. Ltd is looking to raise $300 million in two equal portions to develop 1 gigawatt (GW) of capacity over next six years, managing director Deepak Kochhar has said.
NuPower, which has 200MW of wind projects in operation and an additional 500MW in the pipeline, is seeking investments from pension funds in Canada, Australia and the US, which are keen to expand their renewable energy portfolios, Kochhar said. “We are looking at two tranches of $150 million each, which we are quite hopeful on,” he said.
NuPower, which is in early talks with some of the funds, expects to sew up the funds in the next six to eight months. It raised about Rs.300 crore from a renewable energy fund of Singapore-based private equity firm Accion Capital Management Pte Ltd in return for an undisclosed equity stake in 2012. NuPower also borrowed Rs.750 crore from Punjab National Bank in the same year, and subsequently, borrowed funds from Axis Bank Ltd and Central Bank of India.
NuPower initially plans to set up 500MW capacity over the next three years in Tamil Nadu, Karnataka, Rajasthan, Maharashtra, Andhra Pradesh and Madhya Pradesh. In the following three years, it plans to develop another 500MW.
The company also entered the turbine manufacturing business, using technology from Germany’s Wind to Energy GmbH and recently commissioned a 30MW wind farm in Sangli, Maharashtra with its own turbine. It now wants to focus on power production alone.
Kochhar was a financial services entrepreneur before he founded NuPower in late 2008.
“There are so many businesses that may give a higher return, but here there is some sense of passion. Here you are contributing to energy security for the nation, to global climate change, and there is huge savings in foreign exchange for the country on account of (increased) coal import substitution and improved technology,” said Kochhar. The manufacturing sector consumes 50% of the country’s power. About 100,000MW of wind energy can result in annual savings of $14 billion in foreign exchange on account of lower coal imports of 140 million tonnes, said Kochhar. He also expects inflow of funds to rise for the entire renewable energy sector.
India has a target of installing 100GW of solar power capacity and 60GW of wind power capacity by 2022. Apart from NuPower, Goldman Sachs-backed ReNew Power Ventures Pvt. Ltd, Morgan Stanley-owned Continuum Wind Energy Ltd, JP Morgan-backed Leap Green Energy Pvt. Ltd and Welspun Renewables Ltd are the other wind power producers in the country. Suzlon Energy Ltd, Gamesa Wind Turbine Pvt. Ltd, WinWinD, Inox Wind Ltd, ReGen Powertech Pvt. Ltd are the leading wind equipment makers in the country.
Average tariff in the wind energy sector are currently benchmarked at Rs.5 per unit and vary from state to state. Investors are estimated to generate around 16% internal rate of return (IRR).
Wind capacity in the country, which currently stands at 24GW, had seen a decline between 2012 and 2014 because of withdrawal of government benefits such as generation-based incentives.
The capacity growth has, however, seen a rise after the benefits were rolled out again.
India’s wind energy market is expected to grow at an annual average rate of 20% over the next five years, helped by the government’s initiatives, restoration of fiscal incentives, and entry of large investors due to the attractive return on investment, which is at least 14% IRR, according to a 17 December report by Maybank Kim Eng Securities.
“Attractiveness of the wind power market has increased due to the entry of large organized investors and increased efficiencies offered by new turbines,” the report said.
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