INDIA Law and Practice Contributed by: Anuja Tiwari, Mallika Anand, Pranjal Bhattacharya and Antra Shourya, AZB & Partners
toral challenges and local-level experience ‒ are fac- tors that drive investor entry-decisions. Investors usu- ally adopt a mix of financial instruments (in the form of equity, debt or hybrid instruments) to access the energy and infrastructure M&A market in India. These investments are increasingly becoming more strate- gic, as investors seek to protect themselves against developmental and execution-level risks and the regu- latory challenges in each sector by using clear mitiga- tion strategies or through valuation adjustments. Although investors do adopt structures (especially in platform-based transactions) whereby certain execution- or project-level risks are assumed by the investors along with the company, it is not common, particularly in certain energy and infrastructure sub- sectors that are highly regulated or have localised execution-level challenges. Even in the case of joint ventures, foreign participation is largely strategic and often involves sharing of technical know-how rather than ground-level execution. The Indian energy and infrastructure M&A market has witnessed participation from a broad spectrum of investors, such as institutional investors, private equity funds, pension funds, multilateral agencies, and sovereign wealth funds seeking to enter specific energy and infrastructure sectors through Indian part- ners. However, private equity and infrastructure funds continue to remain among the most active. Government-backed infrastructure-focused funds have also played a crucial role in recent times. NIIF, with platforms in renewables and smart metering, is a notable example in this category. 1.4 Energy and Infrastructure Projects India’s pipeline of energy and infrastructure projects is increasingly defined by very large-scale renewable developments alongside select conventional power projects that contribute to the energy mix. In the context of renewable energy, there is a strong push towards gigawatt-scale solar and wind projects, as well as integrated facilities combining manufactur- ing, storage, and green hydrogen. These are comple- mented by medium-scale projects in the 300–600 MW range under central and state tenders, which form the bulk of annual capacity additions. Conventional pro-
jects remain fewer in number, ranging from 1 GW to over 10 GW capacity, particularly in thermal energy. India’s oil and gas sector is presently undergoing significant development, with a plan to expand the city gas distribution network to 33,500 km and con- sequently increase natural gas’ share to 15% in the energy mix. In terms of installed capacity, as of June 2025, non- fossil-fuel-based sources contribute about 49% of the total energy mix. Meanwhile, thermal power continues to remain dominant as India continues to transition towards its decarbonisation goals. 2. Establishing and Exiting Early- Stage Companies in the Energy and Infrastructure Industry 2.1 Establishing and Financing a New Company In India, most infrastructure projects are developed through the PPP mode under the competitive bidding route, which allows only limited foreign participation – either by way of a joint venture or consortium. Each sector is also considerably regulated, with most sec- tors having sectoral regulators. Therefore, entrepre- neurs (particularly project developers and manufactur- ers) are advised to incorporate in India. It is very common in India for entrepreneurs and inves- tors in the energy and infrastructure industry to estab- lish early-stage ventures through the private limited company route. Project developers frequently set up private limited companies or special purpose vehicles, as lenders and regulators prefer a ring-fenced struc- ture for financing and compliance. Early-stage financing for energy and infrastructure sectors (typically provided in the form of equity, debt- equity or convertible instruments) is largely dependent on the specific subsector, given that the challenges and the regulatory regime differs across the subsec- tors. Therefore, primary capital can be raised from local investors, promoters of family offices, govern- ment-sponsored funds, etc, or a combination of these sources. In more recent times, foreign private equity
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