British International Investment

Tata Capital Limited

South AsiaFinancial services

Tata Cleantech Capital Limited (TCCL) is a Tata Group Non-Banking Finance Company (NBFC) in India.

This investment was made when British International Investment was named CDC Group.

Our investment

Description of the investment.

CDC’s $30 million directed lending facility to Tata Cleantech Capital Ltd. (TCCL) is expected to (1) avoid greenhouse gas emissions by increasing deployment of energy efficiency and e-mobility solutions to support climate change mitigation; and (2) reduce freshwater consumption by increasing deployment of water efficiency and wastewater treatment projects to reduce water stress for consumers and ecosystems. The facility is also expected to support the sustainable development of resource efficiency sectors in India by helping demonstrate the bankability of resource efficiency financing.

Impact information

Applies to investments made from 2019 onwards. The tabs in this section define what we expect to achieve through the investment, assessing the potential impact of the investment against six dimensions of impact. You can find more details on our methodology of assessing impact here.

What?

Impact
  • Avoid greenhouse emissions through increased efficiency and sustainability of energy consumption (SDG targets 7.3 and 13A).
  • Reduce freshwater consumption through increased efficiency and sustainability of water-use and wastewater management (SDG targets 6.3, 6.4 and 12.2).

How?

Primary Secondary
  • Direct: Provide debt financing to increase deployment of energy efficiency and e-mobility solutions to reduce consumption of fossil fuels and therefore greenhouse gas emissions.
  • Direct: Provide debt financing to increase deployment of water efficiency and wastewater treatment solutions to reduce freshwater consumption and therefore improve the sustainability of water resource management.

Catalysing markets: Support the sustainable market development of energy efficiency, water efficiency and e-mobility sectors in India by helping demonstrate the bankability of resource efficiency projects.

Who?

Stakeholder Geography Characteristics
Planet

Global

N/A

Consumers

India; state variable depending on final use of proceeds.

Assuming a 33 per cent split of proceeds to water efficiency, we expect CDC’s directed lending facility could finance sufficient capex to cumulatively avoid c. 6.39 million m3 per year of freshwater consumption over eight years.

How much?

Scale Depth/Duration
  • Planet (related to energy efficiency/e-mobility activity): Assuming a 33 per cent split of proceeds each to energy efficiency and e-mobility segments, we expect CDC’s directed lending facility could finance sufficient capex to cumulatively avoid c. 58,000 tonnes of CO2 per year over eight years. The majority (more than 90 per cent) of this impact is expected to come from energy efficiency, with the balance from e-mobility sub-projects such as electric vehicle fleet rollout.
  • Consumers / planet (related to water efficiency and wastewater treatment activity): Expected to be deep as 54 per cent of India is classified as severely water-stressed and supply is projected to fall 50 per cent short of demand by 2030. Impact is generally expected to be deeper for projects in northern and western states where baseline water stress is highest and therefore freshwater availability the scarcest.

Market-catalysing impact is expected across the three segments but is likely to be deeper for e-mobility, which is the most nascent subsector of the three. In 2018, electric vehicle penetration was 0.1 per cent of the market and just c. 100 charging stations existed across India.

Contribution/additionality

Contribution/additionality
  • Financial additionality: The commercial market does not offer capital in sufficient quantities to meet the company's plans or needs. Our facility is unique in directing funding for nascent resource efficiency sectors, which should accelerate the speed, scale and tenor of TCCL’s loan deployment in these sectors.
  • Value additionality: We will provide technical assistance support to implement a monitoring and measurement framework for resource efficiency sectors to track impact and the underlying borrower level.

Grid score

Grid Score

To help us direct our investments, we previously used a tool called the Development Impact Grid. It scored investments out of four, based on two factors: the difficulty of investing in a country and the propensity of the sector to generate employment. This tool was used for investments until the end of 2021. Since 2022 it has been replaced by the Impact Score.

This investment is made under an approved Catalyst Strategy, and therefore does not require a grid score.

Risk

Execution Risk
  • Relates to the risk of being unable to fully deploy the facility or that end-borrowers will fail to successfully implement resource efficiency projects, given these are nascent sectors that are still gaining traction in the market. This is correlated with commercial risk and subject to the same mitigants.
Alignment Risk
  • Relates to the risk of proceeds not being on-lent toward target subsectors as intended. Considered low given disbursement mechanisms built into the facility.
Evidence Risk
  • Relates to the risk that there is insufficient data to monitor and measure downstream impacts (climate-related and market-level) that will occur, as CDC is not lending directly to end-borrowers. This includes capturing potential second-order impacts related to economic opportunities for employees created through cost savings realised by end-borrowers, for which there is currently insufficient evidence to include as an impact pathway. We aim to mitigate this through the implementation of a monitoring and measurement framework with TCCL as part of CDC’s value-add.

Reporting and Complaints Mechanism

The Reporting and Complaints Mechanism allows anyone outside BII to report alleged breaches of the business integrity or environmental and social provisions of BII’s Policy on Responsible Investing. This includes breaches made by BII, a BII investee, or a portfolio company of a fund in which BII has invested. The Reporting and Complaints Mechanism Rules are available here. Reports and complaints can be submitted by email to [email protected] or by mail. See more details on our Reporting and Complaints Mechanism here.

For any other general enquiries contact us at [email protected]

  • Key facts

    Last updated

    When the last quarterly update of the website database occurred.

    :
    June 2024
    Project number

    An identifier number shared by investments in the same project.

    :
    D4189
    Status

    The current status of the investment (green flag for active and red flag for exited).

    :
    Active
    Region

    The geographical region where the country is located. We currently invest in Africa, South Asia, South East Asia and the Caribbean. In 2023, BII’s investment mandate was extended allowing it to invest in regional funds linked to Ukraine, with the majority of activity expected to begin post-war. Investments outside these regions were made prior to 2012 under previous investment mandates.

    :
    South Asia
    Country

    The countries where the investment delivers impact. Where impact is delivered in multiple countries, this is indicated.

    :
    India
    Sector

    We prioritise those sectors that facilitate development and need our capital the most. Our priority sectors contribute towards many of the Sustainable Development Goals. They range from investing in the power infrastructure that will provide people with better access to electricity, to investing in financial institutions that direct capital to the individuals and businesses that need it the most.

    :
    Financial services

    We provide capital in the following ways: directly – through direct equity, direct debt, guarantees and other non-intermediated financial instruments; and indirectly – principally through investment funds.

    For direct investments and fund investments, this is the date BII committed capital to the investments. This is typically the date on which legal agreements are signed by all parties.

    For the portfolio companies of our fund investments, this is the date (either the month or the quarter) on which the fund committed capital to the portfolio company.

    For direct equity investments, this is the date at which British International Investment exited the investment.

    For debt investments, this is the date at which the final debt repayment was made.

    For funds, this is the date at which the fund was terminated.

    For underlying fund investments, this is the date at which the fund manager exited the investment.

    The total amount committed, per financial instrument, per investment, on the date BII becomes subject to a binding legal obligation to provide funding or assume a contingent liability. This information is provided in US dollars.

    For direct investments, this is the amount that BII has committed to the business or project. For fund investments, this is the amount BII has committed to the fund.

    The currency in which the investment was made.

    Investment type :
    Debt
    Start date :
    December 2020
    Amount :
    $30m
    Currency of investment :
    USD
    Domicile

    The company or investment fund’s place of incorporation.

    :
    India
    Climate finance

    Indicates whether the investment is climate finance qualified or partially climate finance qualified and the type of climate finance (adaptation, mitigation or both). We define climate finance using the multilateral development bank (MDB) and the International Development Finance Club (IDFC) Common Principles climate finance methodology. See Common Principles for Climate Mitigation Finance Tracking and Common Principles for Climate Change Adaptation Finance Tracking. We provide the climate finance qualification and type for commitments from 2020 onwards, which is when we launched our Climate Change Strategy.

    :
    Fully qualified
    Climate finance type:
    Mitigation

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