Artha Energy Resources (AER) has created RenewShare, an online platform for renewable energy (RE) investing that allows for fractional ownership of RE assets in the nation. It is an independent investment platform to cater to investors looking to diversify their existing portfolios by investing in India’s rapidly growing RE environment.
According to a corporate release, it has already reached an initial AUM of Rs 7 Crore. It also receive an early investment commitment of Rs 10 Crore from investors, with RE assets scattered across four locations.
In an e-mail conversation with FE Online, Animesh Damani, Founder, and CEO of RenewShare discuss the new investment option, dangers, and potential for RE investors. Excerpts with Edits:
What are the renewable energy investment prospects for consumers and small investors?
The existing investment options in renewable energy (RE) for small and individual investors are almost non-existent. The only option to gain exposure to the industry is to invest in listed RE stocks or an InVIT Co. Due to the significant upfront cost required, consumers and small investors cannot directly own enterprises.
What is RenewShare offering?
Renewshare is India’s first investment aggregation platform, facilitating investments in renewable energy assets. The RE sector has a reputation for being an extraordinarily expensive asset class to acquire and manage on one’s own. As an aggregator, our goal is to tackle this problem by making it easier to reduce the ticket size for investors.
A portfolio of renewable energy projects is thematically grouped together to form an SPV that is listed on the marketplace. Each SPV has a theme, and each asset adheres to the concept of that SPV. Moreover, investors can opt to invest in one or more SPVs, depending on their preferences.
The minimum investment ticket size is Rs 20 lakh.
Do you have the authorisation from regulators to provide financial products?
As an online site, we are not subject to the jurisdiction of any approved authority. Before investing in the platform’s products, investors must undertake their own due diligence.
How will you use the funds?
The money pooled by the investors goes to the SPV they have chosen. The ownership stake is assigned in proportion to the funds invested. The funds are then invested in different real estate assets by the SPV. The returns on RE assets are dispersed to investors in proportion to their ownership stake. The platform charges a fee for completing the whole transaction and guiding investors throughout the investment’s life cycle.
Why do you believe RE could be a lucrative asset class?
RE Assets are long-term enterprises that demand a big initial investment but yield periodic returns over a very long period of time. Depending on the length of the power selling agreement, a brand new RE asset can earn profits for up to 25 years. Furthermore, the asset’s maintenance costs are modest, and it is simple to monitor remotely. Because the raw material is a natural resource, there are few operating challenges.
In terms of statistics, the returns on a RE asset are typically about 11-12 percent; which is greater than an A+ rated corporate bond and doubles the current 10-year FD rates from prominent Indian banks. The returns from the RE category are just marginally lower when compared to the NIFTY 500 Index during the last ten years.
How can small investors make the most from RE investments?
Because of the high ticket sizes of RE assets, it is currently impossible to reduce ticket sizes for a small investor. Their best chance would be to consider an InVIT Co or equity investment.
What is the potential for growth in renewable energy investment over the next five years?
The government takes three years to install the first GW of roof-top solar plants. In only one year (during a pandemic year), India added 1 GW of rooftop projects. Furthermore, to fulfill the government’s entire renewable energy objective of 2030. The yearly investment in new renewable energy assets across the solar, wind, and hydro would be Rs 1.40 Lakh crores ($18 Billion) every year; totaling $90 Billion in only the next five years. These figures show the enormous potential of the real estate investment sector!