Whalesbook
Early Exit Plan Underway
I Squared Capital, a global infrastructure asset manager with $55 billion in assets, is reportedly exploring selling its majority stake in Polaris Smart Metering Pte. The firm has hired Impact Infracap to manage the potential sale. The deal could value Polaris at around $200 million (₹1,892 crore).
This potential exit comes about 2.2 years after I Squared Capital invested $150 million for a majority stake in the smart metering company via its ISQ Growth Markets Infrastructure Fund in February 2023. Infrastructure funds usually hold investments longer, typically three to seven years, making this early exit exploration noteworthy.
Polaris Wins Major Deals Amid Sector Growth
Polaris Smart Metering, which operates in India through its subsidiary Gomati Smart Metering, has won major contracts. These include a project to install 5.1 million smart meters for Madhyanchal Vidyut Vitran Nigam in Uttar Pradesh and another for 2.2 million meters in West Bengal. The company has an order book of about $1.1 billion across various Indian states. In mid-April 2026, Polaris also secured ₹710 crore (around $80 million) in financing from British International Investment (BII). This funding shows investor confidence and is intended to expand its advanced metering infrastructure (AMI) network and deploy over 2.2 million smart meters in West Bengal.
India's Smart Meter Market Surges
India's smart metering market is growing rapidly, driven by government plans to modernize the power distribution network. Schemes like the Revamped Distribution Sector Scheme (RDSS) and the National Smart Grid Mission (NSGM) aim to install 250 million smart meters nationwide by 2027. This initiative seeks to sharply reduce power losses, which are still high in India. The broader smart grid market in India was valued at about $2.4 billion in 2024 and is expected to expand significantly. The smart meter market specifically was valued at around $610 million in 2024 and is projected to exceed $2.7 billion by 2033, growing at an annual rate (CAGR) of 18.1%.
Key competitors include Adani Energy Solutions, Genus Power Infrastructures, Secure Meters, and HPL Electric & Power. Publicly traded companies like Tata Power and Power Grid Corporation of India trade at EV/EBITDA multiples around 6.6x and 9.6x, providing limited benchmarks for private firms like Polaris.
Concerns Over Early Exit and Valuation
Despite Polaris's large order book and recent financing, I Squared Capital's potential early exit prompts questions. While the company has grown, the proposed $200 million valuation on a $150 million investment yields a gross return of 33% over 2.2 years. This could translate to an annualized return of about 15% before fees. For infrastructure private equity funds, this pace might not meet goals for strategies aimed at building companies for higher multiples over longer periods.
Executing large projects carries risks, and the competitive environment is heating up, with major players like Adani Energy Solutions rapidly increasing installations. Any buyer must evaluate Polaris's future prospects, the durability of its contracts, and its ability to sustain profit margins in a fast-changing market. This is especially true given the government's significant influence on sector growth through tenders and schemes.
Smart Meter Sector Poised for Continued Growth
Regardless of I Squared Capital's decision, India's smart metering sector is set for continued growth. Clear government goals, major investments, and the need to improve power distribution create strong opportunities for companies like Polaris. Demand for advanced metering infrastructure is expected to stay high, pushed by regulations and the benefits of smart technology for grid reliability and consumer transparency. Polaris's existing contracts and recent financing position it to win a share of this growing market.