London Stock Exchange
30th June 2016
Hosted by the London Stock Exchange, the inaugural India Forum of the Green Infrastructure Investment Coalition (GIIC) brought together European institutional investors, Indian green infrastructure developers and financiers, development banks and perspectives from both governments.
The Forum allowed investors to discover the abundant investment grade opportunities in India generated by the low-carbon transition (one that will require investments of approximately USD 1-2tr per year globally), whilst giving project developers and financiers a chance to discuss their project pipelines. Participants also examined and addressed barriers to capital flows in India and explored available solutions.
“What we are doing is bridging a gap between a country with the ambition to change and be climate resilient, but with a shortage of capital; and another where capital exists and is looking for a better yield.”
- Sean Kidney, Climate Bonds Initiative
"The UK is the third largest foreign investor in India, and green finance is now a new growth path.”
- Anjungla Jamir, First Secretary, High Commission of India
“India will be the spearhead of this [low-carbon] transformation.”
- Pierre Ducret, Special Advisor on Climate Change, Government of France and COP22 Presidency
Twelve Indian project developers and financiers presented their five-year infrastructure pipelines to investors. Presenters outlined plans to issue USD 5-7bn of green bonds primarily to raise capital for renewables and energy efficiency projects. Equity investment opportunities were also discussed. The presentations also included updates on India’s evolving macroeconomic conditions by Bloomberg New Energy Finance (BNEF) and the National Institute for Public Finance and Policy. Opportunities for risk bridging were also discussed.
“It is great to have events like this with concrete investment opportunities.”
- Sue Reid, Vice-President Climate & Energy Programs, CERES
Data from the Ministry of Finance showed India as the fastest growing economy in the world, with an increasingly open market and the strongest macroeconomic outlook for several decades; inflation has stabilized, the fiscal deficit has shrunk and retail oil prices have been held at USD 70, providing increased market stability for investors.
The government is making progress on a number of its commitments to build stable governance infrastructure and develop a robust financial system through introducing comprehensive tax, administrative and legislative reforms.
“There is a fundamental policy shift in India so that ‘green and clean is becoming mainstream’. We are not underselling the structural problems we have, but we are doing something about it.”
- Dr Rathin Roy, Director, National Institute of Public Finance and Policy
India’s renewable energy expansion offers plenty of opportunities for investors looking for yield. India’s power generation capacity is expected to increase 4 fold by 2040. To hit the government’s target of 175 GW renewable energy capacity by 2022, current project flow needs to double or triple, according to analysis presented by Bloomberg New Energy Finance. USD 90bn will be required from debt capital markets to finance the additional renewable energy capacity (c. 130 GW - 70% of capital requirements will need to come from debt capital markets.
“Of the 26 countries we operate in, India is the greatest opportunity.”
Skypower, largest solar developer in the world
High financing costs in India were addressed during the Forum, with several solutions offered by participants. The Indian bond market is underused by foreign capital, often shying away because of high foreign exchange risk and lack of investment grade products. EXIM Bank of India told the Forum that they are in a position to hedge much of the currency risk through long-term hedging contracts, bringing down the cost of capital by up to 4% (compared to an average of 12% cost of capital for solar projects according to BNEF).
“I hope that both India and the UK can be each others biggest green infrastructure investors”
- Sir Roger Gifford, former Lord Mayor of the City of London, chair of the Green Finance Initiative & Director at SEB
Development Banks and agencies present at the Forum also spoke of their expanding role in facilitating low-carbon investments in India.
The International Finance Corporation has committed USD 625m to support installations of commercial rooftop solar and is also working, in collaboration with the India Innovation Policy Lab, to set up a warehousing facility with a credit line of USD 500m for developers of small projects.
USAID will provide credit enhancement and a loan guarantee facility of up to USD 100m for renewable energy projects of up to USD 500m.
“The Obama-Modi deal opens the way for new collaboration. Our total aid exposure is currently not being met. India is now the least risky country we invest in.”
- Christopher Adams, Investment Officer, USAID
*Engagement with London-based investors and banks continued after the Forum. The following day was scheduled for bilateral meetings between participants. GIIC also organized group meetings between potential green bond issuers and BlackRock, the world's largest asset manager, and HSBC, a leading investment bank.
Learn how investors are gaining exposure to the new engine of the world economy.
With 1.26 billion people and an economy expected to grow at 8% p.a., India has become a new engine of the global economy. Much of that growth is intended to be green.
India has huge green infrastructure plans: a target of 175 GW of renewables by 2022, a ramp-up of rail transport, energy efficiency projects and development of 100 “smart cities”. These opportunities require significant capital investment.
The aim of the event was to allow investors to understand the various ways of gaining exposure to this quickly growing asset class. The Forum covered India’s goals, policy measures being implemented, and investment opportunities becoming available. We have invited participants to present 5 year pipelines of green investment opportunities, including bonds and equity, with ticket sizes of $100 million and over.
The presentations provided an in-depth account of the scale of investment taking place in India, current issues facing the industry and financing strategies being deployed. The Forum was an opportunity to meet with financiers and project developers directly involved in building green infrastructure and to discuss the realities of investing in India.
- India’s macroeconomic context and infrastructure goals
- Planned investment pipelines
- Investor experience with Indian green infrastructure
- Barriers and solutions to scaling up investment
- Facilitated networking sessions
- Circa 15 Executives from India's largest infrastructure financiers and project developers
- National Institute of Public Finance & Policy, Director Dr Rathin Roy
- UK Government Infrastructure Envoy, Alok Sharma, MP
- Former Lord Mayor of the City of London and Head of City of London's Climate Finance Initiative, Sir Roger Gifford
- Special Advisor on Climate Change, Government of France and COP22 Presidency, Pierre Ducret
- LSE Plc, CEO Nikhil Rathi
- ExIm Bank of India, Deputy Managing Director, David Rasquinha
- India High Commissioner First Secretary, Ajungla Jamir
- Federation of Indian Chamber of Commerce and Industry, Director Pratik Dattani
- UNEP Inquiry, Co-Director Nick Robins
- Climate Bonds, CEO Sean Kidney
- Bloomberg New Energy Finance, Ashish Sethia