Interest in Indian Solar Assets remains High Despite COVID Crisis

Interest in the Indian solar industry and assets remains as high as ever amongst foreign investors despite the COVID crisis as well as other setbacks faced in recent times due to non-payment of dues by distribution companies and the overall distress in the Indian power sector. A total investment of USD 490 million to acquire a joint stake in solar assets of Adani Green Energy a month ago, followed by a private equity giant investing USD 204 million to buy a 317 MW portfolio of assets from construction company Shapoorji Paloonji group.

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Investors are finding this an ideal time to buy long term solar assets at attractive prices as Indian groups are looking for cash as the debt piles up for many of them. Shapoorji Group has been particularly stressed in recent times and has been looking desperately to raise cash by selling stakes in its assets across the construction, real estate, and other sectors. The company was also been looking to mortgage its prized stake in the Tata Sons company as cash flow issues have arisen across the group. Its recently listed solar EPC company Sterling and Wilson has seen a massive drop in its stock price as the company’s promoters failed to pay back a loan that they had taken from the company.

Indian industry is facing a difficult time in raising debt or equity as bond markets have become illiquid due to a rise in risk aversion with not only rates but the whole access to capital becoming difficult in the wake of the COVID crisis. The Indian financing industry had been rocked by a series of insolvency events in the last two years in the form of the IL&FS, DHFL, Yes Bank, and others. The COVID crisis has made this problem even more acute with one of India’s largest mutual fund groups Franklin Templeton winding down six of its debt mutual funds with assets of nearly USD 4 billion as it could not meet its redemption requests. Even other mutual funds particularly those in the credit risk category have seen investors selling off and moving to the safety of putting the cash in the banks. Even banks have become highly risk-averse parking their excess deposits in the central bank at low rates rather than risk it in normal lending activities.

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