Eversource Capital, India's top climate investor, seeks to raise $1 bn

By Anto Antony

Eversource Capital, which closed India’s largest climate impact fund in 2022, is seeking to raise at least $1 billion as it scouts for companies to back in other Asian countries, according to its Chief Executive Officer.
 

“Water, food, agri-value chain and recycling will be the key themes the new fund will invest in,” Dhanpal Jhaveri, Eversource’s CEO said in an interview at his Mumbai office, without sharing a time line for the latest round of fund raising. 

The climate-focused asset manager plans to tap new investors as well as the existing backers for its second fund. While India will remain the focus, there are plans to diversify to countries such as Indonesia, the Philippines, Vietnam and Bangladesh, Jhaveri said. 

Eversource — the joint venture of local private equity firm Everstone Capital and the UK’s Lightsource BP — raised $741 million for its maiden fund in 2022 from investors including, National Investment & Infrastructure Fund and British International Investment.

There is a growing cohort of asset managers from Brookfield Asset Management Ltd. to BlackRock Inc. looking for investments that aim to combat climate change. The global scientific community overwhelmingly agrees that climate change poses a threat to the economy and society at large, through loss of labor hours, food chain disruptions and worsening health outcomes.

While Europe still towers over the rest of the world when it comes to investing in climate strategies, there’s increasing interest in Asia. There’s also a large unmet need. Asian economies face a funding gap of $815 billion to meet their climate mitigation and adaptation needs, International Monetary Fund said on its blog.

Already Looking

Eversource’s 32-member team is already on the look out for projects and companies that seek to combat climate change to invest in from the next fund, according to Jhaveri. 

It invested in seven companies through its first fund including waste management platform EverEnviro Resource Management Ltd., e-buses operator GreenCell Mobility Ltd., and climate lender Ecofy Finance Pvt.

Some exits are likely through sales to larger investors, Jhaveri said. Eversource typically looks for an annual return of over 20% on the equity investment over a life cycle of as much as seven years, he added.

“We are a classic feeder to global investors like large pension funds and private equities,” Jhaveri said. “We take the companies to a certain level, and then they buy us out and play the whole game.”