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Dubai’s sovereign wealth fund, Investment Corp. of Dubai (ICD) through its subsidiary Dubal Holding Llc is scouting for investments in an Indian renewable energy platform.
The sovereign wealth fund’s interest in the Indian renewable energy space comes in the backdrop of Prime Minister Narendra Modi’s pitch for investment in August last year during his visit to the United Arab Emirates (UAE), three people aware of the development said, requesting anonymity.
“Dubal Holding is interested in investing in a renewable energy platform,” said one of the three people. India is the UAE’s second largest trading partner, with the two countries sharing a “comprehensive strategic partnership”. India, which requires large infrastructure investment has been trying to persuade the UAE’s $800 billion sovereign wealth fund to invest in the country.
“The Indian clean energy space is where Dubal Holding’s interest is. It has been enthused by the success of Government of Singapore Investment Corp. (GIC) and Abu Dhabi Investment Authority (ADIA) in the sector,” said the second person among the three people cited above.
Hyderabad-based Greenko Group, backed by Singapore’s GIC and ADIA, acquired SunEdison Inc.’s Indian assets for $392 million last year. Some of the other sovereign funds and government owned investment firms investing in India include Singapore’s Temasek Holdings (Pvt.) Ltd and Abu Dhabi’s Mubadala Development Co.
Experts say an investment by ICD will be a ratification of India’s strategy on renewable energy sources. “If a foreign investment fund decides to invest in a country, it is a measure of confidence in the investment. This implies that it recognizes that India has resources to make renewable sources of energy viable, credible and sustainable,” said former power secretary Anil Razdan.
India, the world’s third largest energy consuming economy after the US and China, has been seeking investments from West Asian economies which are its largest energy suppliers. UAE is India’s sixth largest supplier, accounting for around 8% of India’s crude oil imports. Queries sent to the ICD last week remained unanswered.
“India’s energy security is going to define our energy mix. It is in India’s interest to enhance renewable energy not just for combating climate change but also for its own energy security. Getting out of feed-in tariff and into competitive bidding has strengthened the system. This is great for investors looking for transparent systems,” Piyush Goyal, minister for power, coal, mines and new and renewable energy, said in a statement issued by the Federation of Indian Chambers of Commerce and Industry (Ficci) on Tuesday.
India plans to achieve 175 GW of renewable energy capacity by 2022 as part of its climate commitments. The country is the biggest greenhouse gas emitter after the US and China. Renewable energy currently accounts for 15%, or 45,917 MW, of the total installed capacity of 3,10,005 MW in India.
“For new investments, the environment is a lot more exciting and attractive,” added Goyal in the Ficci statement. Goyal is leading an Indian delegation to the World Future Energy Summit in Abu Dhabi.
According to a report last year by investment bank Ambit Corp. Finance and the UK’s City of London, global pension funds and sovereign wealth funds may invest up to $50 billion in India’s infrastructure sector over the next five years.
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