Sidbi’s Avaana Secures $24.5M GCF Funding

On March 6, 2024, the Small Industries Development Bank of India’s (SIDBI) climate finance arm, Avaana, secured a significant $24.5 million investment from the Green Climate Fund (GCF). This strategic infusion serves as a catalyst for the launch of Avaana’s flagship initiative, the Avaana Sustainability Fund (ASF), with a total corpus of $120 million. The ASF represents a significant milestone in India’s fight against climate change, aiming to propel the nation towards a sustainable future.

Avaana: A Tailored Financial Solutions Provider for Green Businesses

Established in 2020, Avaana has emerged as a prominent player in India’s climate finance landscape. The platform functions as a comprehensive financial solutions provider for green businesses, offering a meticulously crafted suite of instruments designed to address their specific requirements. Here’s a closer look at Avaana’s financial solutions:

  • Debt Financing: Avaana provides customized debt financing solutions catering to various stages of a green venture’s lifecycle. This includes seed capital for nascent startups, growth capital for expanding businesses, and working capital for operational needs. In 2023, Avaana successfully disbursed over $50 million in debt financing to renewable energy companies, enabling them to install over 100 MW of solar capacity across India. Avaana’s debt financing offerings are not limited by a specific project size, allowing them to support both large-scale renewable energy projects and smaller distributed renewable energy solutions for rural communities.
  • Risk Mitigation Instruments: Avaana offers guarantees and credit enhancements, effectively mitigating the perceived risks associated with green investments and thereby attracting more private capital to the sector. For instance, in 2023, Avaana partnered with a leading commercial bank to provide a $10 million loan guarantee for a sustainable agriculture project. This collaboration facilitated easier access to finance for the borrower, a challenge frequently faced by early-stage sustainable agriculture ventures. Avaana’s risk mitigation instruments are instrumental in bridging the financing gap for green businesses and encouraging greater participation from private lenders.
  • Equity Investments: Through its dedicated venture capital arm, Avaana directly invests in promising early-stage climate-focused startups. In 2023, Avaana invested $5 million in a clean technology startup developing a revolutionary battery storage solution for renewable energy integration. Avaana’s equity investments focus on high-impact ventures with the potential to disrupt the clean energy sector and accelerate India’s transition towards a low-carbon future.

GCF Funding Targets Measurable Outcomes in Diverse Green Sectors

The $24.5 million GCF infusion will act as a springboard for the ASF’s operations. The fund will strategically target investments in a multitude of green sectors, with a specific focus on achieving measurable outcomes:

  • Renewable Energy (RE): The fund will prioritize financing large-scale solar and wind projects, alongside smaller distributed renewable energy solutions for rural communities. A key objective is to achieve at least 1 GW of additional renewable energy capacity by 2027 through Avaana’s funding. This focus on renewable energy expansion aligns with India’s ambitious clean energy targets and will play a crucial role in reducing the nation’s dependence on fossil fuels.
  • Energy Efficiency (EE): Avaana aims to support projects that promote energy efficiency across various sectors, such as building retrofits with energy-saving materials, industrial process optimizations, and smart grid technologies. The fund targets a reduction of at least 10 million tonnes of CO2 emissions by 2030 through its EE initiatives. By improving energy efficiency, Avaana contributes to India’s climate goals while also enabling businesses to reduce their operational costs and improve their bottom lines.
  • Sustainable Agriculture: The fund will target investments in climate-smart agricultural practices, such as precision irrigation systems, organic farming techniques, and the adoption of climate-resilient crop varieties. Avaana aims to support at least 500,000 small and marginal farmers in adopting sustainable practices by 2027, leading to increased agricultural productivity, reduced water usage, and enhanced resilience to the impacts of climate change.
  • Climate-Resilient Infrastructure: A crucial focus will be on financing the development of infrastructure that can withstand the intensifying impacts of climate change, such as flood protection systems, drought-resistant irrigation canals, and climate-proof buildings. The ASF aims to invest in at least 10 major climate-resilient infrastructure projects by

Recent Blog : Aurionpro Bags ₹100-Crore SBI Contract for iCashpro+ Platform



Send Us A Message