Key Financings

Major debt and equity deals

In the past one year, the Indian renewable energy sector has witnessed significant financial activity, with a number of funding moves in the form of debt and equity. Also, multilateral lending agencies have played a strong role in financing projects across different renewable energy segments and continued to increase their exposure across the sector. The country also witnessed several green bond issues by companies like Hero Future Energies, the Greenko Group and Axis Bank. Moreover, NTPC Limited was amongst the first few companies in the country to issue green masala bonds. Renewable Watch takes stock of the key financial developments that took place in the sector between November 2015 and October 2016…

Debt deals

  • In January 2016, Suzlon raised  Rs 23 billion as working capital from its lenders. It will use the funds for executing a sizeable order backlog and projects in the pipeline. This sanction is over and above the existing working capital of about Rs 43 million.
  • In February 2016, Hero Future Energies raised Rs 3 billion through the issuance of rated and secured non-convertible “climate bonds”. The funds will be used by the company to expand its renewable energy portfolio and help it in achieving its target of 2,500 MW of installed wind power over the next few years.
  • In April 2016, ReNew Power Ventures signed an agreement with the US-based Overseas Private Investment Corporation for a debt financing facility of up to $250 million. The funds will be utilised by ReNew Power to set up 400 MW of solar power projects in India.
  • In June 2016, Axis Bank raised $500 million from global investors by selling its maiden green bonds. The final pricing for the bonds was 1.6 per cent over the US Treasury Bill and 0.15 per cent lower than the bank’s target. The bonds were oversubscribed by 2.2 times, which prompted the bank to revise down the prices. Axis Bank is the fourth domestic lender (after YES Bank, IDBI Bank and Exim Bank) to have launched green bonds.
  • In August 2016, NTPC Limited raised Rs 20 billion through green masala bonds. These bonds will pay overseas investors an interest in rupees at a yield of 7.48 per cent. The bonds will have a maturity period of five years.
  • In the same month, the Greenko Group raised $500 million by selling green bonds to overseas investors. The proceeds will be used to refinance debt and meet transaction or operating expenses. Greenko will use the money raised to repay its shareholders and meet working capital requirements. The bonds were reportedly oversubscribed by 8.4 times.
  • In September 2016, the National Bank for Agriculture and Rural Development sanctioned a loan of Rs 2.05 billion under the rural infrastructure development fund for developing rural infrastructure in Haryana. Of this, Rs 574.9 million is for a 10 MW solar photovoltaic (PV) power plant at the Panipat Thermal Power Station in Haryana. The plant, once commissioned, will help the state in meeting its renewable purchase obligations.
  • In October 2016, Azure Power tied up with the Overseas Private Investment Corporation for a long-term, low-cost debt financing facility of $20 million. The 15-year loan has a capital cost of 4.74 per cent. Azure will use the proceeds of the loan to develop 19 MW of rooftop solar projects across various states in India.
  • In the same month, YES Bank signed an agreement with the Dutch Development Bank, FMO, wherein the former will raise Rs 3.3 billion through the issue of seven-year green infrastructure bonds with the latter on a private placement basis. FMO will be investing in YES Bank’s bonds through its own sustainable bonds. The proceeds from the investment will be used by YES Bank to finance green infrastructure including solar and wind projects.

Equity deals

  • In December 2015, Inox Wind Infrastructure Services Limited, a wholly owned subsidiary of Inox Wind Limited (IWL), fully acquired Sarayu Wind Power Private Limited (SWPPL). Following the acquisition, SWPPL became IWL’s step-down subsidiary. As per the deal, IWL will also acquire SWPPL’s land bank in Andhra Pradesh, which can host 18 MW of wind power capacity.
  • Further in February 2016, Inox Wind Infrastructure Services Limited acquired 100 per cent stake in Vinirrmaa Energy Generation Private Limited for an undisclosed amount. Following the acquisition, Vinirrmaa became a step-down subsidiary of Inox Wind.
  • In June 2016, Tata Power Renewable Energy Limited (TPREL), a wholly owned subsidiary of Tata Power, completed the acquisition of 100 per cent stake in Indo Rama Renewables Jath Limited, a wholly owned subsidiary of Indo Rama Renewables Limited, with a 30 MW operating wind farm in Sangli, Maharashtra. With this acquisition, TPREL’s total operating wind power capacity has reached 647 MW.
  • In August 2016, Mytrah Vayu Private Limited (MVTPL), a 99.99 per cent subsidiary of Mytrah Energy (India) Private Limited, entered into an agreement with Guayama P.R. Holdings B.V., an investment vehicle of GE Energy Financial Services. As a part of the deal, GE has agreed to invest up to $31 million in MVTPL to support the development of a 200 MW wind energy project in Andhra Pradesh.
  • In September 2016, TPREL completed 100 per cent share purchase in Welspun Renewable Energy Private Limited (WREPL) and its subsidiaries. WREPL has about 1,141 MW of renewable power projects, spread across the solar (990 MW) and wind (150 MW) energy segments. Earlier, in June 2016, Tata Power had announced that TPREL would acquire WREPL through a share purchase agreement at an enterprise value of Rs 92.49 billion, which would be subject to closing adjustments.
  • In October 2016, Greenko Energy Holdings (GEH) acquired the Indian assets of SunEdison. As per the deal, the estimated enterprise value of the acquisition is $392 million and GEH will make a cash payment of $42 million, assuming a project-level debt of $350 million.

Multilateral lending

  • In December 2015, the Asian Development Bank (ADB) extended a $1 billion loan facility to Power Grid Corporation of India for expanding its renewable energy transmission network and undertaking grid expansion. ADB extended $500 million as a government-backed loan and another $500 million as non-sovereign lending. The funds will be utilised to build and upgrade high voltage transmission lines and substations in Rajasthan and Punjab as a part of the government’s Green Energy Corridors project, as well as for setting up high voltage direct current terminals in Chhattisgarh, Tamil Nadu and Kerala.
  • In February 2016, the International Finance Corporation (IFC) tied up with the Madhya Pradesh government to implement a 750 MW ultra mega solar power project being developed at Rewa. With this, IFC helped the state government mobilise around $750 million for the project and extend its global expertise to structure and implement the transaction. IFC’s work on this project will be supported by its partnership with the Department of Foreign Trade, Government of Australia.
  • In the same month, IFC decided to facilitate debt funding for private equity firm Actis-backed Ostro Energy’s wind power projects in India. Ostro is implementing two greenfield wind power projects, which will cost about $246 million. Of this, $62 million will be an “A” loan provided by IFC. In addition, IFC will mobilise $123 million from other investors.
  • In March 2016, OMC Power signed a $4.5 million deal with the US-based Rockefeller Foundation to finance the construction and retrofitting of 100 solar power plants with mini-grids in the rural areas of Uttar Pradesh. The financial arrangement is a part of the foundation’s Smart Power for Rural Development initiative that aims to provide electricity to 1,000 villages and promote economic development in rural areas.
  • In April 2016, ADB approved a direct loan facility of up to $175 million for Mytrah Energy Limited to help fund the development of a portfolio of new wind and solar projects. The loan will be provided to the projects individually on a project finance basis for 476 MW of wind projects in Rajasthan, Madhya Pradesh, Andhra Pradesh and Karnataka, and for 100 MW of solar projects in Telangana and Punjab. With this loan, Mytrah Energy is likely to reach its medium-term capacity target of 1,000 MW.
  • In May 2016, the New Development Bank BRICS granted a $250 million multi-tranche loan to Canara Bank for the development of 500 MW of renewable energy projects. This loan is part of a cumulative loan aggregating $811 million, approved for projects across India, China, Brazil and South Africa.
  • In the same month, the World Bank’s board approved a $625 million loan facility to the State Bank of India (SBI) for supporting the country’s grid-connected rooftop solar programme. The board has also approved a co-financing loan of $120 million on concessional terms from the International Bank for Reconstruction and Development (IBRD) and a $5 million grant from the Climate Investment Fund’s (CIF) Clean Technology Fund. The IBRD loan has a 19.5-year grace period and a maturity period of 20 years, while the loan from CIF has a 10-year grace period and a maturity period of 40 years. SBI will use these funds to provide financing support to solar project developers that want to invest in commercial and industrial rooftop systems.
  • In June 2016, an agreement was signed between the US and Indian governments on new renewable energy initiatives worth $1 billion. The two initiatives for solar power are the US-India Clean Energy Finance (ICEF) and the US-India Catalytic Solar Finance Program. In the initial phase, ICEF will raise close to $20 million from various US agencies in partnership with the Indian government. This funding is expected to leverage an investment of $400 million from the Overseas Private Investment Corporation and other investors for solar projects. The initiatives aim to generate capital flows of $1 billion by routing investments from several US and Indian investment and funding agencies to the Indian solar programme.
  • In July 2016, SBI signed an agreement with the World Bank for a $625 million credit facility to support the grid-connected rooftop solar programme in India. The credit facility will help SBI in financing grid-connected rooftop solar PV projects at competitive rates, thereby improving the investment climate for solar PV. SBI Capital Markets was the adviser for structuring and setting up the facility.
  • In October 2016, ADB committed to provide $500 million for augmenting solar rooftop system installations in India. ADB will provide the funds to Punjab National Bank, which will, in turn, provide loans to various developers and end-users to install solar rooftop systems. The funds comprise $330 million from ADB and $170 million from the multi-donor Clean Technology Fund administered by ADB.

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