Maybank Islamic Berhad has inked an agreement with Maybank MEACP Pte Ltd of Singapore to launch a $500 million private equity fund focused on clean and renewable energy space in India, China and other parts of the Asia-pacific region.
Maybank MEACP is a joint venture created by Maybank (of Malaysia) and Middle East & Asia Capital Partners (of Singapore). Maybank Islamic Berhad operates as a subsidiary of Malayan Banking Berhad, based in Kuala Lampur, Malaysia.
The fund will comprise two parallel investment vehicles – a $350 million master fund supported by Maybank, Asian Development Bank and International Finance Corporation and a $150 million co-financing vehicle supported by Washington D.C.-based Overseas Private Investment Corporation (OPIC).
The first tranche of funds will have an investment of $87.5million, of which Maybank will contribute $50 million, a statement added.
It would be a 10-year private equity fund investing in wind, solar, geothermal, small hydroelectric, biomass, biofuels and energy efficiency projects in the Asia-Pacific region with a focus on countries like China, India, Indonesia, Malaysia, Thailand, the Philippines, Vietnam, Cambodia and Laos, Tengku Dato Zafrul Tengku Aziz, CEO of Maybank Investment Bank, commented on the investment. The fund intends to tap the growing interests of a diverse investor base, keen to leverage clean and renewable energy opportunities in Asia.
“The clean and renewable energy sector is a high-growth sector with multi-faceted opportunities for small and medium business groups,” affirmed Mumtaz Khan, CEO of Maybank MEACP.
Clean energy is becoming a more popular source of power to meet the growing Asian energy demands. The rising prices of fossil fuels, combined with high volatility in the recent years, have sparked a greater worldwide interest in clean energy and it is expected to grow over the next decade, the banks noted.
Private equity investments in renewable energy companies stood at $522 million across 14 transactions for the first three quarters of CY2011, according to VCCedge, financial research platform of VCCircle. This is a remarkable rise, compared to 7 deals worth $98 million in CY2010 and 8 deals worth $112 million in CY2009.
In another deal today, Tata Capital Ltd, a financial services subsidiary of Tata Sons Ltd and focusing on financing clean technology and infrastructure projects through its newly formed unit Tata Cleantech Capital Ltd (TCCL), garnered support from IFC while the latter acquired 19.5 per cent stake in TCCL. IFC has also put money in three other solar power-related firms in India in the past two years, including NDPL Solar and Azure Power.
In September 2010, OPIC, US government’s development finance institution that pools together private sector funds, lent $150 million or around Rs 750 crore for a project to expand the use of solar energy to power telecommunication towers in India.
Similarly, in the wind power sector, Renewable energy start-up ReNew Wind Power Pvt Ltd, founded by prominent deal-maker and former Suzlon Energy COO Sumant Sinha, had received Rs 1,000 crore or $200 million from Goldman Sachs in one of the biggest private investment deals in the renewable energy sector in India.
In 2010, the country witnessed power utility firms dominate private equity deal-making, with conventional power firms raising over $1.5 billion in PE funding. These included companies like Asian Genco (raised $425 million), Moser Baer Projects ($290 million), GMR Energy ($305 million) and GVK Energy ($327 million), among others.
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