GEF Capital Partners eyes $600 million fund after major success with Premier Energies

Mint

2 days ago

GEF Capital Partners, which invests across the US, Brazil and India, is planning a $600 million fourth fund on the back of its blockbuster partial exit from solar modules maker Premier Energies, according to a person briefed on the matter.
The fourth fund could eventually deploy as much as $1 billion after including investor co-investments, the person cited above added, asking to remain anonymous. Co-investments allow investors in a fund to deploy capital alongside the main private equity fund to boost their exposure to an investment.
The PE fund made a partial exit from its investment in Premier Energies by selling a 5.5% stake through a block deal on Tuesday, which amounted to ₹2,625 crore. The initial investment of around ₹177 crore (then $23.5 million) in Premier Energies was led by GEF partner Abhishek Loonker and co-founder Raj Pai in September 2021. It is expected to yield the firm close to ₹8,000-8,500 crore in profits (over $1 billion), including the unsold 5.5% stake GEF retains in the company.
Tuesday's block was sold at ₹1,051.60 per share, which is 52X times higher than the original value of ₹20 per share, a second person with knowledge of the development said. The fund has made two partial exits before, including selling a chunk in August 2024, when it made its public markets debut. The buyers include marquee names such as Goldman Sachs, Morgan Stanley Asia, Nomura Singapore, Societe General, and Blackstone Aqua.
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GEF Capital, which focuses on climate-related investments, did not respond to a request for comment. According to its website, GEF Capital Partners was formed in March 2018 following a spin-out from the Global Environment Fund.
Rise in profit
'Premier Energies is likely to generate phenomenal carry for the firm," one of the people cited above said. Carry is the profit a private equity firm will make after returning the principal fund capital and preferred return of around 8%.
'We are now seeing increased traction from investors wanting to foray into the wider array of decarbonization themes including solar module manufacturing, green hydrogen production, electric vehicles and associated infrastructure, circular economy segments including water and wastewater treatment, waste management, biofuels and recycling sectors," said Prateek Jhawar, managing director and head, infrastructure and real assets investment banking, Avendus Capital.
He said the renewable energy boom, predominantly powered by solar power, is here to stay for the next 40-50 years. And expects companies that move backward along the value chain—from modules to polysilicon—to gain an edge, with policies also supporting more backward integration.
Shivam Bajaj, chief executive of Avener Capital, believes that introducing regulations similar to the Approved List of Models and Manufacturers (ALMM) and the Basic Customs Duty (BCD) on solar modules could help create more success stories like Premier Energies, offering attractive returns for early investors.
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In addition, he believes that policy momentum—such as the ₹18,100 crore ACC PLI scheme and energy storage mandates—is driving investments across the entire value chain. With the National Manufacturing Mission prioritizing clean technologies, including battery production, he expects the sector to attract significant investment and stimulate domestic innovation. 'Moreover, equipment manufacturing/OEM within the climate space continues to be a high-growth potential segment," he said.
Avener Capital is a boutique investment bank focused on the infrastructure and energy sectors.
Next fund
The investment has also made it easier for GEF Capital Partners to raise its next fund. It is sitting on a 200% internal rate of return on its Premier Energies investment, the people cited above said.
GEF Capital invested in Premier Energies from its second fund which was $193 million. The second fund has already exited investments in Syrma SGS Tech, ESDS Software Solution, and Prince Pipes. The second fund also has investments in e-mobility ventures of Hero Motors Ltd, and Ratan Tata-backed Electra EV, in addition to stakes in companies such as SeedWorks and SS Supply Chain Solution.
The firm is currently investing out of its $440 million third fund, which has a $200 million co-investment envelope. Through the third fund, it has invested in Murugappa group's TI Mobility, Sahyadri Farms and EPACK Prefab.
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