I Squared exits solar company and targets Asian gas market

Infrastructure firm chooses a “slightly different but complementary investment thesis” for investing its second fund after selling Amplus Energy Solutions.

I Squared Capital’s co-founder has told Infrastructure Investor that Asia’s natural gas sector is a more attractive opportunity than renewables, after announcing the sale of Singapore-based solar company Amplus Energy Solutions.

Gautam Bhandari said he was “very happy with the result” of I Squared’s investment in Amplus, which the firm sold this month to Malaysian oil and gas company Petronas for an undisclosed price. Bhandari declined to comment on the details of the transaction. However, according to a source familiar with the deal, I Squared received a 2x money multiple for its investment.

Bhandari said the Asian renewables sector was “more competitive” than in 2015, when I Squared invested in Amplus, as investors have poured capital into emerging markets there with high-growth potential and soaring energy demands. I Squared still has exposure to the Asian renewables market through a portfolio company called Asia Cube Energy, which operates assets in Taiwan, China and throughout Southeast Asia.

“Renewables in Asia really took off in 2016 and 2017, when there was a fair amount of demand appetite and very few companies that could execute,” he said. Growth opportunities still exist there, he explained, but “new entrants are going to find it harder and will have to find new ways of providing value” to establish a foothold.

He said I Squared had chosen a “slightly different but complementary investment thesis” for investing its second infrastructure fund, which closed last September on $7 billion: “Historically, the Asian energy story has largely been dominated by coal. For instance, China and India primarily used to be coal to generate. As coal has been rapidly replaced by renewable energy, I think the right intermittent power source you now need will be gas based,” he explained.

Following a platform strategy similar to the one it pursued with Amplus, I Squared last year acquired New Delhi-based THINK Gas to expand the firm’s exposure to the sector.