Satish Mandhana, Managing Director and Head of Investments, EverSource Capital
Sustainability, which is still far from the core of corporate strategy, must move to the centre of corporate strategy going forward. This will create enormous market opportunities for sustainability focused funds. The United Nation’s Sustainable Goals have been agreed upon by nations the world over and these goals offer a fresh set of commercially attractive opportunities.
Affordable clean energy, clean water and sanitation, climate action, zero hunger, good health and well-being, sustainable cities and communities, responsible production and consumption are part of the 17 sustainable development goals adopted by the world, with a targeted timeline of 2030.
The Indian and the UK governments took an initiative to support and seed a fund, the Green Growth Equity Fund (GGEF), to achieve some of the sustainable development goals, with a focus on climate action.
The GGEF has been recently established with the objective of investing in the decarbonisation of energy and its uses, as well as businesses that are adding to the circular economy, thereby creating a positive impact on the environment. This initiative by the governments of India and the UK is for promoting green infrastructure and its enablers and $310 million has been jointly committed to the fund. The GGEF will invest primarily in renewable energy, energy efficiency, energy storage, e-mobility and its enablers such as smart grids, energy efficient motors/pumps, artificial intelligence- and data analytics-based O&M on the one hand and in resource efficient businesses of recycling waste, water and wastewater, carbon capture, greenhouse gas (GHG) abatement, etc. on the other. Having achieved the first close at $350 million, the fund is targeting a final close of $700 million with a green shoe option to take it to $1 billion.
The GGEF is the first India-domiciled private equity fund focused on low carbon infrastructure and its enablers, as well as businesses using Industry 4.0 technologies to improve resource efficiency or become a part of the circular economy. Food and agriculture will be targeted as part of its resource efficiency and GHG abatement mandate and may include opportunities in the areas of drip irrigation, agricultural productivity improvement, and organic fertilisers from biowaste, low cost plant-based proteins and other agri-tech businesses.
The GGEF will prefer businesses that are providing services to businesses that are delivering products, thereby reducing the intensity of resource exploitation and creating a superior business model through the increased use of the same resource.
The fund has the flexibility to invest at any stage of the business life cycle as long as the business is capable of a rapid scale-up, thereby, in most cases, requiring a large pool of capital for its organic and inorganic growth. The GGEF intends to provide significant co-invest opportunities to its limited partners and will use an extensive network of its joint venture (JV) partners, Everstone – a $4 billion fund manager and Lightsource BP Plc (a JV of BP Plc and Europe’s leading solar developer and BP’s designated entity for exploiting solar and related businesses) — for the benefit of its investee companies.
The GGEF will not hesitate in backing management teams with a proven track record of creating scaled businesses to create newer platforms or to enable the buyout of the business managed by them.
The Government of India and the UK government are looking forward to greater cooperation between the Indian and the UK entities through this initiative. The fund is in an envious position of invoking relationships with corporates/groups/institutions based out of the city of London for its investee companies as well as provide access to global relationships of its managers, Everstone and Lightsource BP Plc.
While generating commercial returns, the GGEF will also fulfil developmental, sustainable, replicable and leverageable goals, and will demonstrate high standards of the environmental, social and governance mandate. The fund is ready to deploy capital and is working towards its first commitment as well as raising the targeted capital.