Investment in the Indian green energy sector could reach as much as $800 billion over the next decade, said Debasish Purohit, co-head of investment banking for Bank of America in India.
“The energy transition theme will attract $800 billion investment over the next decade. We expect investments from Indian corporates, foreign strategic investors and sponsors across the entire spectrum of energy transition including green hydrogen, storage and component manufacturing. India, given its scale, is a natural destination for strategic investors aiming for net-zero targets," Purohit said in an interview.
According to the investment bank, it expects the renewable energy sector to garner around $250 billion in investments over the next decade, batteries may attract $250 million while supporting grid infrastructure and other segments such as green hydrogen, equipment and system may get $300 billion in total investment.
Nearly every Indian corporate has announced ambitious plans to foray into green energy.
For instance, Reliance Industries expects to be carbon-zero neutral by 2035.
In an 10 April note, Goldman Sachs said Reliance Industries had made acquisitions over $1.5 billion to build capacity in solar, battery and hydrogen, which would offset emissions from its oil and petrochemicals business. RIL has also been focused on manufacturing polysilicon, wafers, cells, modules, electric vehicles, grid storage batteries, electrolyzers and fuel cells, according to the Goldman report. Other conglomerates like the Adani group and the Tatas have also outlined green energy investment plans.
“Our early focus in this segment ensured we have over 70% market share in renewable M&A over the last 5 years," Purohit said.
In recent years, Bank of America has been an advisor on several green energy and renewables deals totalling over $5 billion. For instance, it advised Actis LLP on the $1.6 billion sale of Sprng Energy to Shell, and TPG Rise on its $1 billion investment in Tata Motors’ electric vehicle business.
Over the last year, large conglomerates such as Tata group, Mahindra Group and the TVS Group have looked to raise capital for their EV businesses too.
Meanwhile, Purohit said in recent weeks, block deals and the primary IPO market across segments has also seen a spurt in activity. Bank of America advised Tencent on a block trade in Policybazaar. It has also managed other block deals including in Zomato Ltd.
The consumer technology segment has seen a valuation reset, Purohit added.
“New private raisings is limited to select top-quartile of companies, where while absolute valuation levels have been protected, multiples have come off," he said, on consumer tech companies.
“Block deals in listed space have continued but transaction sizes have shrunk, probably a reflection of sellers choosing to monetize partially while retaining potential upside from improving market conditions," he added.