India renewables push gets lift from patient money

Workers clean photovoltaic panels inside a solar power plant in Gujarat, India, July 2, 2015. REUTERS/Amit Dave

MUMBAI, Sept 19 (Reuters Breakingviews) - As global borrowing costs rise, patient foreign investors are stepping up to help tycoons recycle capital and speed India’s energy transition. The purchase by Ontario Teachers’ Pension Plan of 30% of Susten, an owner of solar plants, at an equity valuation of $300 million is a case in point.

The wider deal will help the unit of $19 billion Mahindra and Mahindra (MAHM.NS) repay a shareholder loan as Indian businesses deleverage en masse. Over the next seven years, Ontario will spend an additional $450 million on Susten and a related infrastructure investment trust that will initially comprise Susten’s renewable projects.

Companies in the capital-scarce country are partnering with backers that can provide low-cost, long-term funding. In April, Tata Power (TTPW.NS) struck a deal with BlackRock (BLK.N) and Abu Dhabi’s Mubadala. In June, Adani Enterprises (ADEL.NS) did a deal with France’s TotalEnergies (TTEF.PA).

Similar tie-ups helped renewables power 60% of India’s energy capacity additions in the past six years, according to Moody’s. The ratings agency reckons a further $250 billion in investment is needed over the next eight years to meet India’s 2030 goal to roughly triple its energy capacity to 500 gigawatts. There’s room for more Ontarios. (By Una Galani)

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

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