EQT, the Swedish private equity powerhouse whose roughly $45 billion in assets under management span 19 alternative asset funds on three continents, has made its first investment in India. This week the company announced it has partnered with Singapore’s Temasek, to launch O2 Power, a renewable energy platform.
Per this week’s joint announcement, O2 Power will provide more than four gigawatts of installed capacity in solar and wind energy. The platform has received commitments of $500 million from Temasek and the EQT IV Infrastructure Fund, which will be deployed over the next several years.
Led by CEO Parag Sharma, the company will be headquartered in the northern Indian state of Haryana. O2 Power will develop “utility scale” projects in solar, wind and hybrid energy through greenfield development and M&A.
The investment aligns with EQT’s thematic approach in sustainable investing according to the United Nations’ Sustainable Development Goals.
Indian Renewables: Never Get Old
India is already one of the world’s top-five clean-energy producers and its government has set aggressive goals for renewables growth. Current targets stand at 225 GW of installed capacity by 2022 and 40% clean energy by 2030.
Investors have responded to the Modi government’s official sanction with gusto, funneling more than $42 billion into India’s renewable energy sector since 2014. Market growth forecasts have remained robust—even amid reports that the country may soon waive a carbon tax on coal. The move would help India’s financially strapped utility and distribution companies, but could also make coal more price-competitive with the country’s red-hot renewables.
In a statement, Fabian Gröne, Partner at EQT Partners and Investment Advisor to EQT Infrastructure, said, “India presents significant investment opportunities, being the second largest renewable energy market in the world and EQT is delighted about teaming up with Temasek and O2 Power.”
“This is not only EQT Infrastructure’s first investment in India. It is also well in line with our ambitions to contribute to a cleaner future,” he added.
With this transaction, EQT Infrastructure IV is expected to be 60-65 percent invested.
Incidentally…
Separately, EQT made headlines this week after announcing that it would conduct a strategic review of its 10-year-old credit business, whose $4.3 billion in assets under management account for approximately 10% of EQT’s total AUM and around 6% of its revenues.
Speaking to analysts on the company’s earnings call, Chief Operating Officer Caspar Callerström said that growth in the credit space was occurring in areas too removed from EQT’s core business.
“We believe that we should operate all our investment strategies at scale, and this means we will continue to drive the growth initiatives in ventures with growth in public value, in APAC and in real estate,” Callerström said.
The strategic review should be completed by summer 2020, with all options—including a full exit from the credit business—currently on the table.