Abraaj, Aditya Birla to build India solar platform

Abraaj will invest in the platform through one of its funds while Aditya Birla's contribution will come from listed entity Aditya Birla Nuvo. Neither party has indicated how large the financial commitments might be, simply saying that the platform would be "gigawatt scale."

It will bid for projects tendered at national and state auctions, with a view to developing and operating utility-scale plants that can provide clean and cost-effective electricity to the national grid. India currently has 4 GW in installed solar capacity but wants this to reach 100 GW by 2022. To this end, a range of favorable regulatory policies have been introduced.

"The gap in energy infrastructure in growth markets translates into a long-term and sustainable investment opportunity. Renewable energy is set for explosive growth thanks to technological advances, favorable policies and pricing structures that make it a competitive alternative to conventional power generation," said Sev Vettivetpillai, partner and global head of Abraaj's thematic funds business, in a statement.

Platform or holding company-style investments are popular in the energy and infrastructure space. They are able to outlast the lifespan of a typical private equity fund, they allow for additional investment into capital-intensive projects, and there is greater flexibility regarding exit options.

A handful of greenfield renewables platforms have gained traction in India with the support of private capital, including ReNew Energy, Continuum Wind Energy and Greenko. While the first two have received debt and equity funding, the latter listed on London's AIM board. In developed markets, these platforms have also gone public as yieldcos that function much like real estate investment trusts (REITs).

Abraaj invests in the growth markets of Asia, Africa, Latin America, the Middle East and Turkey. It has $9 billion in assets under management and has deployed approximately $1 billion in 10 investments across the energy value chain.

Aditya Birla generates $41 billion in annual revenue and employs more than 120,000 people in 36 countries. Aditya Birla Nuvo is responsible for much of the group's services and manufacturing exposure, with a strong presence in aluminum and copper production.

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• Topics
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