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Red Ribbon

More Spark Plugs than Sustainability…The Green Industrial Revolution is already here and Boris has Missed the Bus

By Climate Change, COVID-19, Environmental Policy, Natural Capital, News, Sustainable Growth, United Kingdom

Boris Johnson may have many talents (it’s possible). But when it comes to climate change mitigation, facing up to facts isn’t one of them: his much trailed Ten Point Plan, flagged as a “Green Industrial Revolution” and launched earlier this month. This commits the UK Government to phasing out the internal combustion engine within the next decade and increasing investment in a range of new technologies, including the Flash Gordon sounding (and currently non existent) Jet Zero Aircraft and Green Ocean Liner.

But well intentioned as it might be, the Plan has more in common with spark plugs than sustainability, and especially so given (despite its snappy title) the Green Industrial Revolution is already well underway, with or without Boris.

It’s about time…

According to the UN based World Meteorological Organization (“WMO”), and despite the impact of COVID restrictions that resulted in short term reductions of between 4.2% and 7.5%, carbon emissions have now reached record levels: global warming has increased by 45% since 1990, with a “growth spurt” throughout 2019 added in for good measure (www.public.wmo.int). The last time there was such a sustained build up in CO2 levels was 5 Million years ago, and we weren’t around then to take note of the statistics then.

So what exactly is Boris planning to do to meet that challenge of the Green Industrial Revolution? 

Well, he aims to phase out the internal combustion engine by 2030 (see above) and that’s obviously an eye-catching measure, but the Ten Point Plan also commits the Government to investing £385 Million in the “next generation” of nuclear power stations.

Despite the fact that even if nuclear capacity was quadrupled by 2050 it would still only account for 10% of UK energy needs, not on any basis sufficient to replace fossil fuel generation and particularly so given the limited investment in wind and solar power envisaged by the Plan.

And that’s leaving aside the inherent dangers and the well-worn capacity of nuclear sites to generate dangerous levels of hazardous waste. It doesn’t sound especially environment friendly. 

Take another look too at that figure of £385 Million. Its chickenfeed bearing in mind the new Hinkley Point C Nuclear Plant Project is expected to cost £22.5 Billion: £3 Billion over budget and fifteen months behind schedule.

A new offshore wind turbine costs an average of £3 Million, so you could build 1000 of them for the cost of one Hinkley Point. In that context the Plan projects a meagre £160 million of new investment in offshore wind technology, so just 80 new turbines… chickenfeed.

The current shortsighted strategy?

And neither will the Plan commit the UK Government to phase out the current short sighted strategy of purchasing carbon offsets from abroad, meaning carbon emissions are effectively exported to territories with lower (non Paris compliant) protocols.

That’s hardly a full-throated commitment to truly international climate mitigation: as though importing “dirty” electricity is fine because it’s not produced in Hampshire. Tell that to anyone living next to a power station in Poland.

To be fair to Boris, there’s also a plan for more bicycles and footpaths, but bikes and boots on their own won’t amount to any sort of revolution: green or otherwise.

So, what about the Ten Point Plan?

In truth, the Ten Point Plan will leave the United Kingdom significantly behind the EU on climate change mitigation (www.ec.europa.eu.).

After Brexit goes live in January, the UK will silently fall out of the Bloc’s sharing arrangements on carbon reduction which are expected to deliver a 55% cut in emissions by 2030.

And India is well on track to secure carbon emission levels to meet a global warming goal of 2 Degrees Celsius within ten years (despite the peculiar challenges posed by its rapidly burgeoning population and fast expanding economy): 40% of the subcontinent’s electricity will be non fossil fuel generated by 2030 and “emission intensities” will be a third of 2005 levels by the same date.

The subcontinent has also increased solar capacity by 1,200% since 2014 and introduced groundbreaking initiatives to minimise domestic consumption levels. In stark contrast the UK Government has actively promoted measures that reduce solar capacity and done little or nothing to reduce consumption.

In short, while Boris scrambles around to define his Green Industrial Revolution the rest of the world has already moved on… the future already belongs to sustainable innovation.

Red Ribbon (www.redribbon.cohas always been committed to pursuing Mainstream Impact Investment strategies that are not only consistent with sustainable growth but also offer above market rate returns whilst at the same time protecting precious natural resources through innovative programmes like the Eco Hotels Project (www.ecohotelsglobal.com).

Find out more about Eco Hotels

ECO HOTELS

Red Ribbon Asset Management is the founder of Eco Hotels, the world’s first carbon neutral mid-market hotel brand, offering “green hospitality” as part of a progressive roll out across India which intended to take full advantage of current market opportunities on the subcontinent.

Executive Overview

Welcome as they might otherwise have been, I can’t help feeling a little disappointed by the obvious lack of ambition in the UK’s Plans for a “Green Industrial Revolution”: not least because they seem largely ignore the radical steps being taken elsewhere in the world on climate change mitigation, and particularly in India.

But having placed Planet, People and Profit at the heart of Red Ribbon’s corporate vision since it was founded more than a decade ago, I remain on any basis committed to the long-term potential of those international strategies, whatever the short-term future of the Ten Point Plan might be.

Back Again, Front and Centre…Joe Biden has Climate Change Top of his Agenda and he’ll find a Key Partner in India

By Climate Change, COVID-19, Eco Hotels, Economic Growth, Environmental Policy, India, Natural Capital, News, Sustainable Growth

Joe Biden intends to reverse Trump’s “dangerous and destructive climate policies” (Joe’s words), and whatever delusions Trump might still entertain on Twitter, Biden is the President Elect of the United States.

Under his stewardship the United States will re-join the Paris Climate Accordson day one” of the new Administration, work to “seek higher ambition from nations across the world” (Joe again), and “follow the science” to reduce emissions while protecting precious resources. So climate change mitigation is back, front and centre …and it’s about time too.

Over three turbulent years Donald Trump systematically cut a swathe through a raft of environmental protection measures: enabling mining companies to dump waste in local rivers, removing prohibitions on methane gas emissions and even abolishing prohibitions on (endangered) species of birds being shot out of the sky and their lifeless bodies made into ashtrays for sale in tourist shops (I’m not making that up). So whatever you might think of Donald Trump’s chutzpah and mutton headed resolution, he was demonstrably bad for the environment.

The stage is finally set for the United States to resume its role in climate change mitigation across the globe, and the totemic significance of Biden’s intention to reaffirm the Paris Climate Accordson day one” simply can’t be ignored.

The US will now be freed up to move to zero carbon emissions from power plants by 2035 (instead of actively promoting fossil fuel dependence under Trump); freed up to dramatically expand solar and wind energy production and to stop endangered birds being made into ashtrays.

So, how are Joe Biden and climate change the perfect partners for each other? Well, the new Biden Administration will also look to build 60,000 new wind turbines, new community solar infrastructure and 500 Million more solar panels across the country within the next five years: and the obligations imposed by (and freely accepted) under the Paris Climate Accords are the backbone of those commitments.

Joe Biden and Climate Change

The Biden Administration’s Green Deal (www.joebiden.com/climate-plan/) is budgeted to cost an eye watering $3 Trillion.

But take a look again at the elements of that package, and in particular the central part played by solar and wind power generation: those are positive and eye catching strategies in contrast to (negative if necessary) emission controls.

On that front India is already a world leader in the production of renewable resource energy: by September this year 36.7% of its capacity was sourced renewably and the subcontinent was also the first in the world to create a Ministry of New and Renewable Energy. It is a net exporter of wind turbine and solar technology to the United States and, especially in its Northern States, India has the perfect climate to power those technologies as well. By 2022 Prime Minister Modi’s Government is planning to install 40 GW capacity of new solar panels on rooftops throughout the country and intends to generate 57% of its total energy needs from renewable sources by 2027 (www.sustainabledevelopment.un.org): 17% in excess of its Paris Climate Accord commitment.

So this much we can certainly be sure of: as the world turns slowly back onto its axis, Joe Biden won’t find a better environmental partner than India.

Red Ribbon Asset Management (www.redribbon.co) has placed the subcontinent at the heart of its investment strategies since the company was founded more than a decade ago. Drawing on an unrivalled knowledge of local markets with an expert team of more than a hundred advisers working in India’s economic hotspots, the Red Ribbon Private Equity Fund (www. redribbon.gi) offers unique opportunities to share in this potential.

Find out more about Eco Hotels

ECO HOTELS

Red Ribbon Asset Management is the founder of Eco Hotels, the world’s first carbon neutral mid-market hotel brand, offering “green hospitality” as part of a progressive roll out across India which intended to take full advantage of current market opportunities on the subcontinent.

Executive Overview

I don’t know how history will finally judge the last three and three quarter years of US foreign and domestic policy, but I do welcome the change signalled last week by the President Elect for a new approach to climate change mitigation.

And, of course, that approach isn’t really that new after all. Most nations across the world have maintained their commitment to the Paris Climate Accords since 2016 and will, I’m sure, welcome the US back into the fold.

Nowhere more than India…

A Disruptive Innovator…Modular Construction has become Housing’s Future

By Affordable Housing, Construction Technologies, COVID-19, Economic Growth, Environmental Policy, Housing Need, Housing policy, Modular Construction, News, Productivity, Sustainable Growth

“The arrogance of success is assuming what you did yesterday is enough for tomorrow”: William Pollard wrote that 100 years before Disruptive Innovation theory was formulated in 1955’s Harvard Business Review, but he perfectly captured the essence and importance of understanding disruption innovation in a modern economy.

Think of established companies like Amazon, Google and Uber, business models that have all disrupted existing markets and delivered outcomes that are radically reshaping our future (and our present come to that).

But disruptive innovation is driven as much by market need as invention, and burgeoning housing demand across the planet is currently driving change like never before…so welcome to the world of Modular Construction, and a new future for housing.

Using outmoded technologies, traditional construction companies have become increasingly focused on long-term (high value) projects, where profit margins are high enough to nurture a culture of inefficiency.

All those piles of rusting steel and timber left scattered around when the project finishes, fossilised remnants of yesterday’s world: all those days lost to rain when workers huddle in huts waiting for the sun to come out, and still more days lost waiting for delayed (piecemeal) deliveries, brought slowly to the site by a seemingly endless convoy of lorries.

But, by definition, all that waste matters more if margins are tighter: on lower margin projects, waste and delay on such an industrial scale can turn a viable development into a loss-making disaster.

That’s why traditional developers have (traditionally) paid far less attention to affordable and mid market housing projects, preferring to focus on profitable customers and build yet another penthouse studded glass tower: the inefficiencies of their business model matter less when the client is a Russian oligarch.

Which means more rusting steelwork, more days lost and more time wasted waiting ankle deep in mud for the latest lorry full of bricks to make its way at walking pace through another inner city traffic jam. This outdated model largely ignores speed of delivery, because speed of delivery largely doesn’t matter. Russian Oligarchs have all the time in the world…they can wait.

But the homeless can’t wait: according to Shelter (www.shelter.org.uk) 320,000 people are currently homeless in the United Kingdom (one in 201 of the population), in the United States the figure is 567,000 (a year on year increase of 40% since 2017), and in India 1.77 Million are in housing need despite the Modi Government working to deliver its ambitious Affordable Housing Programme (www.bajajfinserv.in/housing-schemes), striving hard to meet the demands of the fastest growing population on the planet.

And that’s where disruptive innovation comes in…

Adopting smarter and more efficient technologies, smaller construction companies can challenge these dinosaur incumbents: targeting market segments they either can’t or won’t reach, and that means in particular the homeless and those in housing need.

Economic orthodoxy tells us these smaller (disrupter) companies will then move on to gain a progressive foothold in increasingly higher margin segments by delivering better functionality at a lower price.

By making use of their core technological advantage: and finally, the dinosaur developers will also adjust their own business model as disruption takes root: bad news for Russian oligarchs looking for another penthouse, good news for the rest of us.

Modular Construction is a paradigm case in point: units are fabricated off site and delivered in ready to build panels, so no more convoys of lorries delivering materials piecemeal and no more waiting endlessly for them to arrive.

Built to order in a controlled environment, modular units are also higher quality and waste levels are lower, and costs are lower too.

It enables modular platforms to deliver projects at a third of the cost of traditional alternatives, which is why they are moving into (and will eventually take over) lower margin segments in a way traditional developers at the moment find unfathomable.

And it’s why in time dinosaur developers will be forced to change their business model …that’s the power of disruptive innovation.

What we did yesterday is no longer sufficient for tomorrow: Modular Technologies are important for all our futures.

Find out more about Modulex

Modulex modern method of construction

Modulex is setting up the world’s largest steel modular buildings factory based in India. It was established by Red Ribbon to harness the full potential of fast-evolving technologies and deliver at pace to meet the evolving needs of the community.

Modulex is setting up the world’s largest steel modular buildings factory in India.

Executive Overview

According to McKinsey more than 80% of developers are now to a greater or lesser extent committed to modular construction models: that should come as no surprise to anyone. Modular construction delivers faster, at lower cost and with higher quality thresholds than traditional alternatives.

And now, more than ever, we need those benefits to meet the planet’s burgeoning housing need. It’s time for the world to move on…

COVID or no COVID…Demand Trends across the Indian Housing Sector are signalling stronger growth

By Climate Change, COVID-19, Eco Hotels, Economic Growth, Environmental Policy, News, Sustainable Growth

India’s Real Estate sector is the second biggest source of employment on the subcontinent, and a key driver for meeting housing and infrastructure demands across the fastest growing population on the planet. But, of course, COVID lockdowns brought a sudden halt to construction, with many workers returning to their hometowns and leaving sites at a standstill. So, as the industry emerges from its enforced slumber, what do current trends in the Indian housing sector demand tell us about the wellbeing of this vital part of the economy?

Well, the first point to make is that, like most economic shocks, COVID will inevitably be short lived in the long life of the country, but it will also accelerate key changes in the near term …

Phased construction activities have already resumed and more property sales were registered on the subcontinent from June onwards than in COVID blighted March to June. As a result developers are reporting that between 80% and 90% of their labour force is now back on site, and there has been a parallel blizzard of Government MOU’s inviting tenders for new public sector building projects, especially in Bangalore and Chennai (more of which in a moment).

The Indian Government has been particularly anxious to kick start supply side metrics by offering developers a wide variety of incentive packages, including a recently announced six-month extension in project deadlines under the RERA Force Majeure clause.

And back in March The Reserve Bank of India announced a three-month moratorium on developer loan interest (later extended to the end of August: (www.rbi.org.in), as well as a typically aggressive quantitative easing programme which injected a further $ 24.4 Billion into the economy, enhancing short term liquidity for developers and home buyers alike: stamp duty was also reduced as were property registration fees in many States. 

On the demand side, rates for buyers looking for loans are currently running at their lowest for twenty years (about 7%), with added tax exemptions too including a rebate on loan repayments up to $4,747 annually. Small wonder then that key economic indicators have been showing an uptick in the subcontinent’s property markets since September, with a much more positive growth trajectory (expected to tick up further over the next twelve months). 

JLL India reported recently that the first signs of this recovery in the housing market are being seen in major conurbations (with IT magnets like Bangalore and Chennai leading the way: www.jll.co.in), manifesting itself in particular in the affordable and mid-price segments: the Survey found more than 50% of prospective homebuyers are expecting to complete their purchase within the next six months, so it seems the uncertainties of COVID have actually reinvigorated that most basic of human instincts: a home of your own…and one you can move into quickly.

The way Indian homes are being bought is changing too: consumers are determined to move in as quickly as possible and that, combined with GST exemptions, means so called ready homes are currently winning out over off plan sales (which, by their nature, take longer to deliver). That trend will inevitably favour developers making use of modular technologies. Speed of delivery is, after all, everything in the post COVID era and Modular Technologies deliver three times quicker than conventional construction techniques (www.modulex.in).

In turn this has led to a demand side shift in property price structures: off plan properties for completion in six to eight months may not qualify for stamp duty exemption, but the inbuilt delay in completion means they are now 10% cheaper than the ready home alternative: this will fuel greater near term demand as buyers seek out less expensive options, so both models should see benefits as we emerge from the cloud of COVID.

And as we pointed out on this site recently, government funded programmes are also playing their part. India continues to expand its infrastructure base like never before (COVID or no COVID), and that brings us back to Chennai…

Property prices in in and around the conurbation were more or less static between April and June, but from June onwards analysts reported a rapid increase in demand for the ready home, affordable and mid-price segments (see the Insite quarterly report produced by property portal www.99acres.com). Demand for affordable housing in Chennai has risen by more than 60% this quarter, and a key factor is public infrastructure. Affordable properties within easy reach of the new Siruseri IT Park saw a 9% increase in demand (for sales and rentals), and new highways and improved connectivity to the northern and southern belts of the City have seen sales from Sholinganallur to Tambaram skyrocket. The influx of IT workers together with all those new highways and science parks are pushing prices the roof.

So across the vast territory of the subcontinent, demand in the Indian housing sector is trending inexorably upwards…COVID or no COVID. That can only be good for the future of the economy.

Invest in Red Ribbon Asset Management

Red Ribbon is committed to identifying and building on investment opportunities that are fully in compliance with its core Planet, People, Profit policy: not only offering above market rate returns for investors but also protecting our Natural Capital through innovative programmes like the Eco Hotels Project.

Executive Overview

The subcontinent’s real estate markets are starting to move steadily forward: supported by innovative Government and Central Bank initiatives, but most of all by resurgent levels of consumer demand.

Construction is already (and always has been) a key element of the economy so that can only bode well for the future.

Growing Better by Being Smarter… Sustainability and Economic Growth go Hand in Hand

By Climate Change, COVID-19, Eco Hotels, Economic Growth, Environmental Policy, News, Sustainable Growth

According to NASA figures (and who’s going to argue with them), we’ve just lived through the hottest September ever: wildfires raged in California, the Amazon Rainforest is still on fire (as it has been since August 2019) and Donald Trump was driven to muse about new “Forest Cities”.

The United Kingdom recorded its wettest September day ever, with a single day’s deluge producing enough rain to fill Loch Ness. And over the last twenty-five years, the Great Barrier Reef has more than halved in size, having been around (undiminished) for more than 500,000 years before that. Every successive decade since 1980 has been hotter than the last, and the previous five years have been the hottest ever.

Only the most swivel-eyed, gimlet lipped climate change denier; only Forest City fantasists of the most extreme kind, could fail to see the signals. Our precious planet is in trouble…

Which is precisely why most countries around the world (except for those currently led by swivel-eyed fantasists) are now committed to ambitious climate mitigation programmes of various stripes and colours: and even in the United States, Joe Biden’s Democrats are committed (if elected) to deliver their Plan for Climate Change which will cost something in the order of $ 2 Trillion. The European Green Deal has been costed at $180 Billion, and China’s National Strategy for Climate Change Adaptation is expected to cost a nose bleed inducing $6.6 trillion: all of those figures daunting, but doing nothing isn’t exactly an option (see above).

So where’s all this money supposed to be coming from? Most economies across the globe are still struggling to come to terms with the impact of COVID-19, and we aren’t exactly living through a period of sustainable economic growth.

Added to which most climate mitigation programmes slow down traditional growth vectors, especially so in economies with a high dependence on fossil fuels (like China), those undergoing rapid economic expansion (like India) and those experiencing exponential population growth (India and China).

So how can effective mitigation actually be delivered in an employment and growth-friendly way, protecting key economies and ensuring, perhaps above all else, that the world’s poor aren’t left behind in the process? How can a policy with a built-in tendency to slow down an economy also create the growth it needs to move forward? As Hamlet might have said (in an expanded script) that’s a very interesting question…

And it turns out there’s an equally interesting answer.

The IMF this month produced a blueprint for sustainable economic growth of precisely the kind required, dauntingly titled “A Long and Difficult Ascent” and structured around the central thesis that climate mitigation strategies can also foster growth, even in those vulnerable economies with high levels of fossil fuel dependency and fast-expanding populations. It can do it through a twin-track strategy of creating “an 80% subsidy rate for renewables production” and then combining it with a ten-year public investment programme, which the IMF calls a “Green Investment Push”. And not only is that a much more jaunty tagline than the puritan sounding “long and difficult ascent”, but it is substantially based on policies that have (to a greater lesser extent) already been tried and tested. Analysts predict that in conjunction with a programme of steadily increasing carbon prices (which has also been tried before), the “Push” can increase growth rates annually globe by 0.7% over the next fifteen years and decrease carbon emissions to zero by 2050.

And that 0.7% may not sound a lot, but based on Global GDP last year it amounts to $994,000,000,000 every year for the next fifteen years, or $14.9 Trillion in all: more than seven times the amount needed to pay for Joe Biden’s Climate Mitigation Plan and enough to make the European Green Deal look like a pocket money project. And that, in a nutshell, is how climate change can be addressed, mitigated and paid for in our rapidly changing world.

With the typical understatement of a bureaucrat wearing hush puppies and checking for typos, the IMF’s Chief Economist predicted The Green Investment Push would put the global economy “on a stronger and more sustainable footing over the near term”.

You can say that again…it certainly beats watching more forests blaze into flames live on Fox News, and Loch Ness brimming over with rain. It just takes a little ambition and pluck (as Hamlet might also have said).

Red Ribbon is committed to identifying and building on investment opportunities that are fully in compliance with its core Planet, People, Profit policy: not only offering above market rate returns for investors but also protecting our Natural Capital through innovative programmes like the Project.

Find out more about Eco Hotels

ECO HOTELS

Red Ribbon Asset Management is the founder of Eco Hotels, the world’s first carbon neutral mid-market hotel brand, offering “green hospitality” as part of a progressive roll out across India which intended to take full advantage of current market opportunities on the subcontinent.

Executive Overview

We desperately need to square the circle and reconcile economic growth with sustainable, planet friendly programmes; and to my mind the newly unveiled IMF Green Investment Push is capable of doing just that. 

It’s certainly a programme we as Red Ribbon can happily buy into, having placed Planet, People and Profit at the very heart of our vision since the company was founded more than a decade ago.

asset mangement

Building Back Better… More than ever before, that means Modular Construction

By Construction Technologies, Housing Need, Modular Construction, Productivity No Comments

Building back after an external shock (like COVID) can present formidable economic difficulties, but housing and public sector programmes present especially complex challenges at the moment.
In this week’s Newswire we examine how technology and market forces are coming together to help us build back better.

Read More

Property Project Delays

By India No Comments

What happens when a major construction project, made up of dozens upon dozens, if not hundreds of underlying interlocking contracts between contractors, suppliers, engineers and architects reaches a point where just one of those contracts is subject to dispute? A supplier isn’t paid or an architect won’t sign off a stage payment.

All too often the answer has been that the whole project grinds to a halt; and it’s been a major bone of contention in the construction sector for years.

Not anymore.

In a positive step aimed at boosting further growth in the construction sector the Indian Cabinet Committee on Economic Affairs (CCEE) has approved a number of measures proposed by the Niti Aayog; all of them designed to stop underlying disputes and quibbles on contractual terms from holding up completion of the much bigger construction project of which they all form part.

The package includes measures for faster settlement of disputes between contractors and government departments; the introduction of a clever provision for the deposit of a security fund in escrow (similar to an adjudication process) which will allow disputes to be settled on an interim basis with final resolution awaiting the completion of the project (so as not to delay the completion itself) and a new secured system of appeals from arbitral award where the appellant is a government department.

It is a mechanism closely modelled on procedures which have been deployed in other jurisdictions (notably the English Law ICT Contract) where experience has shown it to yield real, indeed striking results in speeding up the construction process. In the specific circumstances of the new Indian Model it should also lead to fewer funds being locked up in arbitration which have made it particularly difficult in the past for construction companies to keep up with interest payments on borrowed funds.

The fact procedures and systems of this kind are now being introduced into the Indian Construction Sector is very much to be welcomed. It can be expected to lead to still more construction activity; driven by the assurance that a whole raft of technical blocks and red tape have been removed from the process. Those involved in the Construction Sector can now expect a lot more time on Site, and not in a Court or an Arbitrator’s Office. Lawyers might not be happy with that but no doubt they’ll be able to find other things to do.

Commenting on the new regulations, Finance Minister Arun Jaitley said that he expected them to:

“……..pump a lot of liquidity into the sector, activate real estate and infrastructure projects which have been stranded for some time and support the whole process for dispute resolution in relation to construction and real estate.”

And the Reserve Bank of India agrees:

“Given the significant multiplier effect the construction sector has on the economy, these measures are expected to give a major boost to economic growth.”

They are both likely to be right, if only on the basis of the experience in other jurisdictions as referred to above.

Red Ribbon CEO, Suchit Pannose thinks:

“Anyone investing in property will be familiar with the horror stories which abound of perfectly good and promising plans for development being bogged down and often killed off by litigation and contractual disputes sparking off at an interim stage of the development. So I welcome these new provisions from the Indian Government.

They have the twin virtues of seeking to speed up the whole construction process which can only be a good thing and freeing up funding, too often locked up in lawyers’ bank accounts whilst disputes rumble on, seemingly endlessly.

And of course we are living on a crowded planet; serious shortages of housing stock on the subcontinent are a matter of persistent and justified public concern. Anything which smooths out the process of releasing further stock has to be a good thing.

It should all add to the existing spectrum of investment opportunities.”

We can expect further growth in the Indian Construction and Property Sectors to follow.

Renewable Energy

By India No Comments

India’s Prime Minister, Narendra Modi has committed his Government to installing at least a further 100 GW of Solar Capacity, together with the complex base of supporting infrastructure such a huge project requires, by 2022 at the latest. It is a seriously challenging target; and one can’t help but be reminded of the debacle in Indonesia following the similar policy commitments made by MEMR in 2014; commitments which were, of course, stopped in their tracks by the Supreme Court just as they were about to be rolled out. We are still waiting for the Indonesian Government to issue its first quotas.

But the situation is looking a lot more positive in India because interest in all forms of alternative energy has been growing strongly since 2014 and this week Gamesa Corp, which is, by market share, the largest wind turbine manufacturer in India, announced that it is to start build out on its first Wind/Solar Project on the Subcontinent within the next two months; and Suzion Energy is also expecting to get more active in Photovoltaic generation: announcing that it is expecting to become a lot more active in Photovoltaics and Hybrids in the first quarter of next year.

Hybrids are important to the ambitious Solar Programme which is now on foot on the Subcontinent; they provide a robust and complementary “kicker” platform for the Core Solar Model, the two sources combining technologies and sharing grid capacity in a way that developers believe will provide a realistic basis for the expected growth in overall capacity. That, no doubt, is why the Indian Government has also issued a new Draft Policy Paper committing itself to a target for Hybrid Production of 10 GW by the same 2022 Deadline in place already for Solar. It might only be a tenth of the equivalent Solar Target, but it should be enough to ensure the Solar Platforms get an additional catalyst for growth to achieve the full ambition of the Government’s Policy Objectives.

And, of course, it’s not just a numbers game.

On 6 September the G20 issued its Hangzhou Communique which is likely to accelerate still further India’s push towards cleaner energy generation. You don’t need the insight of Cassandra to work out that targeting of that kind is bound to drag Solar Rollout along with it; and if anything the target figure in the Government’s Solar Policy might in the fullness of time start to look too light.

All of which may help to explain the timing of this week’s announcement from Gamesa.

The Chief Executive Officer of Gamesa India, Ramesh Kymal, was obviously in no doubt: his company is targeting a perfect storm for growth.

And just look at the international context. Over the last year alone Toshiba and Mitsui announced the completion of a solar project in Japan’s Aichi Prefecture and in Queensland Windlab and Eurus Energy are building out a large scale Solar and Wind hybrid platform. India is by no means alone in looking to Hybrid Generation as the ideal complement for Solar Growth.

Finally, and not unimportantly, it is worth remembering too that India’s topography is ideally suited to the new model for growth. Rajasthan, Gujarat and Madhya Pradesh all have the perfect geographic conditions for Solar Projects. Jain Devansh of Inox told Bloomberg this month that Inox is just waiting for MNER’s Draft Policy to be finalised before moving forward with plans for alternative energy rollout in all three States.

CEO of Red Ribbon, Suchit Pannose said:

“I am obviously glad to see that the Government’s Policy is being given some much needed traction by these recent announcements; although my feeling is that there is still quite a lot of work to done in thinking through issues such as optimal transmission systems, available substation capacity and general issues on return on investment. If it is possible to get all of that right, which I am confident it is with a little insight, then it may well be that Hybrid as a whole could have the potential to generate stimulate even greater returns on Photovoltaic Production..

The G20 Communique earlier this month will obviously set the tone towards cleaner energy initiatives; specifically the joint protocol issued by the USA and China.

It seems to me that India is certainly on the right track and has fixed on the right model.”

ICICI Prudential: India’s First Insurance IPO

By India No Comments

ICICI Prudential Life Insurance Co. Ltd’s initial public offering (IPO) is the first in the Indian insurance sector. With demand for shares running at 10.5 times availability (ICICI Bank will sell 181.34 million shares in the insurance company), this values the insurer at Rs 47,950 crore ($7.2 billion).

Suchit Punnose comments on ICICI Prudential IPOOur CEO, Suchit Punnose, commented on this, saying:

“the level of over-subscription did not surprise him. As the economy grows in India and the population movement from rural to urban areas continues, the expectations of the population change. They want the lifestyle they see others have so more people are looking to invest in funds that will grow their wealth. They know that they cannot get the returns they want, to pay for the lifestyle they desire, simply by putting their money in the bank.

As the population ages, the pressure on the younger generations increases. Families in India are having less children now than thirty years ago*, and there are few signs of this changing. Families are recognising the need for investment, for life assurance and for other wealth creation and planning solutions. Companies such as ICICI Prudential are providing these and so will be prime targets for investors when opportunities such as this IPO appear.

Insurance is just one of the needs of the Indian population, alongside housing, infrastructure, entertainment, hospitality and consumerism. Indian IPOs have raised over $5billion already this year across a range of companies providing the needs for the changing Indian population. The investment is coming from around the world, as well as from high net worths and institutional investors within India. Why would they not take advantage of the growth?”

*OECD figures show total fertility rates in India have dropped by 40% since 1980

Red Ribbon

At Red Ribbon we understand that the transition towards a resilient global economy will be led by well-governed businesses in mainstream markets, striving to reduce the environmental impact of their production processes on society at large and on the environment as well.

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