EIG invests $125m in Indian renewables player Greenko
EIG Global Energy Partners has invested $125 million in Greenko, an India-focused renewable energy developer that has previously received funding from the likes of GIC Private and TPG Capital.
The proceeds of the investment will be used to refinance a $70 million facility - structured as convertible debt - provided by Standard Chartered in 2011. The debt is due in January 2015. EIG's capital injection will also go towards the development of Greenko's 2.2 gigawatt portfolio of hydro and wind assets.
According to a filing, EIG is investing through a six-year instrument with a cash coupon of 5% per annum and a payment-in-kind (PIK) coupon of 6% due on maturity. EIG has the option of converting this PIK coupon to Greenko shares. The private equity firm will also get one board seat on Greenko's offshore holding company.
With a portfolio that already includes wind, run-of-river hydropower, natural gas and biomass assets, Greenko is now focused on building utility scale wind farms and hydropower projects across India. This will be done through winning concessions for greenfield assets as well as making selective brownfield acquisitions. The company wants to reach 1 GW of operational capacity in 2015 and around 2 GW by 2018.
TPG's growth arm committed $35 million to Greenko for a 10% stake in 2010 as part of a $116 million capital raise from a selection of institutional and other investors. Participants in the round included existing investors Global Environment Fund and Aloe Private Equity. The following year GE Energy Financial Services and Greenko agreed to invest $50 million and $65 million, respectively, to build wind farms in India.
In 2013, Singapore sovereign wealth fund GIC Private agreed to pay GBP100 million ($149 million) for a 19.5% stake in Greenko.
"India is a high growth energy market with improving macroeconomic fundamentals and sustainable power is critical to India's continued success," R. Blair Thomas, CEO of EIG, said in a statement. "As such, we couldn't be more pleased to enter this strategy market alongside a company of such stature."
EIG is a specialist investor in energy and energy-related infrastructure globally, with more than $15.7 billion under management as of June 2014. It has committed $16.4 billion to more than 290 projects and companies in 34 countries since inception, including the formation of a joint venture with Asia-based Noble Group earlier this year. Greenko represents the firm's first investment in India.
EIG closed its latest global energy fund - Energy Fund XVI - at $6 billion in December 2013 after just 10 months in the market. The original target was $4.25 billion.
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