Investing

Bridging the Gap: Eversource Capital's Pioneering Journey in Climate Impact Investments

In the bustling office of Eversource Capital in Mumbai, a pioneering vision unfolds as the company's CEO, Dhanpal Jhaveri, discusses their ambitious goals for the future. As they celebrate the successful close of India’s largest climate impact fund in 2022, Eversource Capital is not resting on its laurels; the fund is gearing up to ascend new heights by aiming for a staggering $1 billion in capital for its next endeavor.

Tapping Into the Heart of Sustainability

The new fund, which Eversource Capital is fervently working to establish, is set to bolster critical sectors that uphold the ethos of sustainability. The fund will ardently support enterprises in water conservation, food security, the agricultural value chain, and recycling sectors—"We are significantly investing in the veins that sustain our environment and societies," Jhaveri states from his office, where the future of green investment is being mapped out. Though specifics of the timeline remain under wraps, there's palpable excitement in the air for what's to come.

Eversource intends to cultivate partnerships both old and new, continuing relationships with past backers and welcoming fresh investors alike. The central focus shall remain on Indian ground, where their roots lie. Yet, the firm is also casting its net over broader geographical horizons—countries such as Indonesia, the Philippines, Vietnam, and Bangladesh are on the prospective expansion map.

The inaugural fund, amassing $741 million, featured investments from high-profile entities like the National Investment & Infrastructure Fund and British International Investment. This act not only solidified Eversource's presence in the climate impact arena but also highlighted the global thrust toward environmental consciousness driven by investor interest.

Rising Tide of Climate Finance

In a battle against the climate crisis, asset managers ranging from juggernauts like Brookfield Asset Management Ltd. to BlackRock Inc. are vigorously seeking out investments with the potential to make significant environmental differences. This strategy is echoed by the scientific community’s consensus that climate change poses considerable threats to global economies and societies—from labor loss to food chain instability and aggravated health risks.

Despite Europe's dominance in this investment sphere, Asia is attracting increased attention for its potential in climate strategies. However, there’s a looming disparity between the needs and the available funding. According to the International Monetary Fund, Asian economies confront an alarming $815 billion gap required to fulfill their climate adaptation and mitigation objectives. These insights can be further explored on IMF’s blog.

Eversource Capital's Proactive Approach

Eversource Capital is not merely a spectator in the field of climate finance. Its dedicated 32-member team is actively scouting for worthwhile projects and companies dedicated to climate change solutions for the upcoming fund. Jhaveri emphasizes the proactive approach of the team, revealing, "We are in constant pursuit of innovative initiatives that align with our vision of a more sustainable and resilient future."

The fund's maiden sortie in the environmental arena facilitated investments in seven companies. Those include EverEnviro Resource Management Ltd., an end-to-end waste management platform; GreenCell Mobility Ltd., an operator specializing in electric buses; and Ecofy Finance Pvt., a firm that extends financial support with a focus on climate initiatives.

Celebrating the potential growth of these investments, Jhaveri points out that some exits may manifest as acquisitions by larger-scale investors. With an eye for strong performances, Eversource traditionally seeks annual equity returns exceeding 20% over a lifespan of up to seven years. Jhaveri explains the strategy in succinct terms: "We act as a conduit for global investors like major pension funds and private equity firms. We nurture companies to reach a threshold of maturity and significance, and then these larger entities take the lead."

The Investment Life Cycle

This collaborative investment model positions Eversource as an essential 'feeder' to the global investment ecosystem. It plays a pivotal role in elevating companies to a stage ripe for the engagement of heavyweight investors, who can then scale the initiatives to their maximum impact. As Jhaveri succinctly puts it, "We set the stage, they play the game." It is a cycle of nurturing and growth, empowerment and advancement—a virtuous circle of climate-focused investing where every participant plays a crucial role.

The Broader Horizon: Beyond Investments

Eversource Capital isn't just about funding. It's about fostering a paradigm shift towards a greener economy and a more mindful approach to business and investment practices. Jhaveri and his team are acutely aware that financial returns are but one facet of their mission. The greater ambition lies in positively influencing environmental outcomes and driving the transformative change needed to combat the existential threat of climate change.

The objective is clear—the new funding round strives not only to be instrumental in scaling businesses but also in shaping a brighter, more sustainable future. By investing in sectors pivotal to environmental stability, the fund aims to create a ripple effect that will resonate across economies and communities, fortifying resilience in the face of ecological adversity.

Conclusion

In the march towards a sustainable future, Eversource Capital stands as a beacon of proactive climate impact investment. With a strategic focus on pivotal sectors and an expansion plan reaching across Asia, the firm is gearing up to champion the next generation of green businesses. Such endeavors not only speak to the enduring spirit of innovation but are also a testament to the collective drive towards a healthier planet. At the heart of this initiative lies a commitment to unfurl a canvas where businesses and the environment can thrive in harmony—a future where the principles of sustainability are embedded in the very fabric of the global economy.

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