Environmental, social and governance (ESG) investing in Asia-Pacific (APAC) continues to bloom, with ESG deal volume in the region climbing past that of the Americas in recent years. Within APAC, Indian deal values have looked particularly rosy since the advent of the coronavirus (COVID‑19) pandemic. In 2022 year to date (YTD; to 14 October), Indian ESG M&A ranked behind only China, with 20 deals worth USD 8.9bn, according to Dealogic data.
Looking at the broader picture, ESG investment in APAC this year has surpassed the Americas in terms of total deal volume, with 130 deals worth USD 25bn. The number is significantly lower than at the same time last year, when 192 deals were signed for USD 53.89bn.
ESG investment in India enjoyed a stellar 2021 YTD, racking up USD 11.18bn across 18 transactions. This followed on from 21 deals in 2020. Prior to the arrival of COVID‑19, there were only 13 deals in 2019, per Dealogic data.
Shailesh Vickram Singh, founder of venture capital fund Climate Angels, says that ESG infrastructure is benefiting from substantial capex-driven investment in the country. Hydrogen-related funding is also increasing, in turn driving growth in the sector. In addition, solar and wind energy continue to attract considerable support.
Investment into India’s ESG space has poured in from the UK, Canada, Singapore, and the UAE, as well as from domestic investors.
JSW Energy and JSW Neo Energy has been an active acquiror in the wind energy segment, with a swathe of investments in 2022. Among these, according to Dealogic, are Mytrah Vayu (Pennar), Nidhi Wind Farms, Bindu Vayu Urja, Mytrah Vayu (Godavari), Mytrah Vayu (Tungabhadra), as well as others.
The renewable energy space has seen a slew of other deals, including the acquisition of Godavari Green Energy by Virescent Renewable Energy Trust, the takeover of Sunshakti Solar Power Projects by Torrent Power, Ayana Renewable Power snapping up Tirunveli Solar Project, while Shell and Shell Overseas Investments BV bought up Solenergi Power.
Added to the list is Tata Power Renewable Energy, which received investment from Mubadala Investment Co (Mubadala) PJSC, BlackRock and BlackRock Realty Advisors.
Singh notes that regulators and consumers in India are especially aligned when it comes to climate.
He adds that while the current macroeconomic environment is likely to have some impact, a favorable policy regime, in addition to climate-change conferences such as COP26 and COP27 raising more awareness, should set the stage for further ESG activity in the country.
Going greener
Looking forward, SUN Mobility, a Bengaluru-based clean energy infrastructure services firm for electric mobility, plans to net USD 100m via a Series D fundraising in the next three to six months. The company has hired Nomura Capital to assist, according to a Mergermarket report in September.
Chennai-based internet-of-things digital water management solutions provider WeGOT aims to conclude a Series A funding in the coming months to enable expansion into Southeast Asian, North African, Australian and Middle Eastern markets.
Mergermarket reported in July that Bengaluru-based energy and water consultancy firm Enzen Global Solutions intends to raise USD 250m-300m by the end of the year. The company is also weighing a potential listing next year on India’s National Stock Exchange.
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