EAI's Presentation at Private Equity Workshop - Energy Infrastructure Investing & Lending

Venue : Taj Mahal Hotel, New Delhi
Start Date : 11th march, 2010
End Date : 12th March, 2010
Speaker : Narasimhan Santhanam, CEO, EAI

Event Profile

More than 100 private equity deals have taken place in the Indian power sector, many involving climate change projects and those with size in excess of $ 50 million. Big firms and several budding entrepreneurs have successfully raised private equity for power projects. Another 100 private equity deals, or more, can be anticipated in India's power/energy and renewable energy sector in the coming years. Institutional investors will invest more in renewable energy private equity.
Given the burgeoning demand & supply of power sector capital , this special professional event provided a timely & good exposure to the techniques of private equity and debt providers for conventional & renewable energy.

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EAI Presentation

EAI's presentation focussed on the following two topics:

  1. Potential and Investment Challenges in Small Hydro in India
  2. Potential and Investment Challenges in Wind Energy in India

Among the points that were covered were for both wind and small hydro:

  • Small Hydro & Wind in India – Intro and Potential
  • Potential vs. Exploited for these RE sources for India
  • Investment Trends
  • Costs and Returns - Capital and operating costs (including break-ups), tariffs and revenue streams, IRR, payback, ROE
  • Key challenges faced by investors in these sectors

    View the entire presentation here

    click here to download the presentation I

    click here to download the presentation II

    Speakers and Key Takeaways from the Event

    The following were the speakers and topics:
    Day 1
    1. Suneet Maheshwari - CEO, L&T Infrastructure Finance - Equity & Debt Financing for Power Projects
    2. Amitabh Gupta - CFO, Moser Baer PV
    3. S.S. Kohli - Chairman, IIFCL - Energy Financing: Role of IIFCL
    4. Amulya Charan - CEO, Tata Power Trading Co - Acquisition of Energy Resources, Case Study of Indonesian Coal Mine Acquisition
    5. Vipul Bhagat - International Finance Corporation - Investment Models for Public Private Partnerships
    6. Alok Gupta - CEO, Axis Private Equity - Case Study of Private Equity in Shalivahana Green Energy (with commentary from Komaraiah, CEO & MD - Shalivahana)
    7. Mahesh Babu - CEO, IL&FS Ecosmart - Investments in Waste-to-Energy Projects in India: Challenges & Opportunities
    8. Awadh Giri - Head, New Projects - Moser Baer
    9. Nishant Bhardwaj - Asian Development Bank - Asian Carbon Fund
    10. Karthik Ranganathan - Head, Renewable Energy Investment, Baring Private Equity Partners - Private Equity in Renewable Energy
    11. Narasimhan Santhanam - CEO, Energy Alternatives India - Wind & Hydro Energy Investing Considerations

    Day 2
    1. Rajesh Sinha - International Finance Corporation - Investing & Lending in Power Generation Projects - Criteria, Challenges, Experience & Best Practices
    2. Vijay Sirse - Chairman, vTrium Energy - Investing & Lending in Power Projects: Due Diligence Techniques
    3. Siddarth Nigam - Partner, Grant Thornton - Mergers & Acquisitions in the Power Sector
    4. Vikram Pant - Managing Director, India Infrastructure Fund, IDFC Private Equity - Private Equity Infrastructure Funds: Investing in Power Projects
    5. Srividya - Partner, Grant Thornton - Valuation of Power Ventures
    6. Prerna Mehndiratta - BMR Advisors - Renewable Energy: Tariffs & Incentives
    7. H.L. Bajaj - Technical Member, Appellate Tribunal for Electricity - The Power Purchase Agreement: Key Aspects: Resolution of Tariff Matters.

    In brief, the following are the take-aways:
    1. There is a significant amount of interest among PEs for investments in both traditional and renewable energy
    2. PEs - not surprisingly - are not very keen on risky technology bets in renewable energy, but are OK with business model risks
    3. Some of the PEs (such as IFC, ADB etc) are willing to take fairly long-term views (with over 10 year horizon)
    4. Most PEs consider the Electricity Act of 2003 as a turning point in the Indian power sector.
    5. Investment sweet spot ( in terms of the quantum) varies from fund to fund, but obviously for most of the blue-chip, it is upwards of $50 million.
    6. PEs are well aware of the regulatory and societal bottlenecks that could arise in large-scale energy sector investing (especially for coal-based and large-hydro based sectors).
    7. Many PEs feel that even though they are finance guys, as investors they need to have an excellent understanding of the nitty-gritties of the local markets where they are investing, though they might not have such an understanding in all cases.
    8. Many PEs are clear that they wish to invest in businesses that can stand on their own revenues (even if takes a while) and are not keen on business plans that rely on getting bought out.
    9. Most every PE acknowledged that while they might not like coal, it is here to stay as the largest contributor to power for the foreseeable future.
    10. PE arms of organizations such as IFC and ADB, while not shutting out the option of investing in coal-based or natural gas based power plants, have a mandate to decrease their exposures to these non-green sectors.

    Audience Profile

    Private Equity, including Infrastructure Funds, Venture Capital, Fund Raising, Carbon Traders/Carbon Project Finance, Investment banking & M&A, Power development, transmission, distribution, including renewables, Power equipment or ancillaries, Legal and financial advisors