Initial public offerings of companies active in transition industries in India have fallen steeply as valuations decline, Bloomberg has reported, citing only two listings for transition companies since the start of the year.

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Bloomberg quoted unnamed sources as saying the immediate outlook for transition IPOs was not too bright, with bankers recommending valuations up to 30% lower than the numbers sought by company executives.

“Growth is slowing,” Edward Lees, co-manager of BNP Paribas’ Emerging Markets Environmental Solutions fund, told Bloomberg. “People are just less tolerant of this idea of having to pay a green premium.” Also, Lees said, investors are paying more attention to the profitability of such companies now than they used to.

In India specifically, there are also other problems that are turning into obstacles to IPO activity. One of these is failure on the part of alternative energy developers to secure long-term deals with buyers. Bloomberg again reported earlier this month that a growing number of wind and solar installations were having trouble securing offtake agreements with regional grid operators, as established by climate change outlet the Institute for Energy Economics and Financial Analysis.

As much as 35 GW worth of new projects were waiting to sign such offtake agreements with grid operators amid bureaucratic delays and expectations that wind and solar power prices would be on a consistent downward curve. Even so, the outlook, at least per BloombergNEF, is bright, with new installations this year expected to break a record.

By Charles Kennedy for Oilprice.com

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