Key Financings

Major debt and equity deals

In order to achieve the ambitious renewable energy target of 175 GW by 2022, an estimated investment of over $100 billion will be required. While this is a sizeable amount, India’s renewable energy capacity expansion plans have already attracted significant domestic and international interest. In step with the current pace of development, there has been a significant increase in financing on both the debt and equity fronts. Industry players have been exploring new and innovative financial mechanisms as well as alternative instruments to lower the cost of capital, and thereby seeking long-term commitments from global institutions. A number of capital market listings have also taken place.

Renewable Watch takes a look at the key financial developments that have taken place in the sector in 2017…

Commercial loans

  • In October 2017, Reliance Money, a part of Reliance Commercial Finance Limited, secured a Rs 3 billion loan from the Indian Renewable Energy Development Agency (IREDA). The loan will be used to develop renewable energy and energy efficiency projects in the country.
  • In August, ReNew Power Ventures raised $50 million from YES Bank to refinance the debt of the 44 MW Amba wind power project in Madhya Pradesh. YES Bank will exclusively arrange for funds through the issue of non-convertible debentures (NCDs). The move is a part of ReNew Power’s cost reduction strategy to lower interest costs for the project.
  • In the same month, the Rural Electrification Corporation (REC) sanctioned a loan of Rs 130 billion for Maharashtra State Power Generation Company Limited. The loan is not restricted to renewable energy projects and can also be utilised to set up thermal power plants as well as auxiliary equipment such as flue gas desulphurisers.
  • In June, the State Bank of India (SBI) announced that it would provide Rs 4 billion to private developers to finance 100 MW of grid-connected rooftop solar projects. The loan has been provided under the SBI-World Bank Grid Connected Rooftop Solar Photovoltaic [PV] Programme for a period of 15 years, with an interest rate of 8.35 per cent per annum. The developers benefitting from the programme are Azure Power, Amplus and Cleanmax. The capacity of the projects and programmes financed range from 25 kW to 16 MW.
  • In February, the Infrastructure Development Finance Company (IDFC) provided Rs 6.75 billion in a 70:30 debt-equity ratio to Solairedirect Energy India’s solar project in Rajasthan. The project is being developed at Bhadla under the Jawaharlal Nehru National Solar Mission. A special purpose vehicle, Solaire Urja Private Limited, was formed to channelise the loan from IDFC. The timeframe for the loan repayment is 18 years and the company will have to pay 11 per cent interest during the construction period and 10.5 per cent interest after the start of commercial operations.

Multilateral financing

  • The European Investment Bank (EIB) has committed to providing funds for affordable solar energy development in solar-rich countries as part of its collaboration with the International Solar Alliance. Under this, in October 2017, the EIB announced its decision to provide Euro 800 million or nearly Rs 61.3 billion worth of funds for renewable energy investments across India. This includes renewable energy financing in partnership with IREDA and the India Infrastructure Finance Company. In addition, the EIB is set to finalise a Euro 200 million credit line for renewable energy projects in association with YES Bank.
  • In September, the International Finance Corporation (IFC) approved a $150 million loan for ACME Jaipur Solar Power Private Limited, a wholly owned subsidiary of ACME Solar, to develop a 250 MW solar project at the Rewa Solar Park in Madhya Pradesh. IFC plans to issue up to $50 million through NCDs and will help mobilise up to $100 million from other lenders. The loans will have a long tenor and a fixed rate of interest.
  • In August, the Asian Development Bank (ADB) decided to provide a $500 million government-backed loan and $500 million of non-sovereign lending to Power Grid Corporation of India Limited (Powergrid), with co-financing from the Asian Infrastructure Investment Bank. The proceeds will be used to finance additional power transmission network components that will complement the Green Energy Corridors and other grid strengthening and expansion projects.
  • In the same month, IFC granted a $150 million loan to Arinsun Clean Energy, a subsidiary of Solenergi Power Private Limited, for the development of its 250 MW solar project at the Rewa Solar Park. IFC plans to issue $50 million through NCDs and an additional $100 million from other lenders. The funds will be utilised by Arinsun Clean Energy for engineering, procurement and construction (EPC), as well as operations and maintenance (O&M) of the project.
  • In August, a consortium of 12 British and Indian universities including Oxford University, Cambridge University, Brunel University and Imperial College, London, received a grant of GBP 7 million from the UK government to build five self-sufficient, solar-powered buildings in remote Indian villages. The grant by the Global Challenges Research Fund is a part of the SUNRISE solar project, which is aimed at developing printed PV cells and new manufacturing processes that can be used to manufacture solar energy products in India.
  • In June, the World Bank provided low-cost financing to solar rooftop developers under a $625 million Programme for Results routed through SBI. A loan for 100 MW of projects was approved earlier. Such programmes are aimed at de-risking financial flows and improving the availability of debt financing for the rooftop segment.
  • As part of the Partnership to Advance Clean Energy programme, in June, the US Department of Energy announced its decision to provide $7.5 million to India for grid improvement. The programme envisages research, development and deployment of smart grid and new energy storage technologies that will help modernise the grids of both the countries and thus increase grid resilience and reliability.
  • In May, ADB approved the first tranche of the $500 million multi-tranche finance facility for funding the Solar Rooftop Investment Program approved by it in 2016. The first tranche, worth $100 million, will be given to the Punjab National Bank. This will help it finance large rooftop solar systems on industrial and commercial buildings in several states. The Government of India is a guarantor of the loan. Of the $500 million, $330 million will be provided from ADB’s ordinary capital resources and $170 million from the Clean Technology Fund (CTF).
  • The World Bank approved funds worth $100 million in March for the development of solar parks in India. The funds include a $75 million loan from the International Bank for Reconstruction and Development with a maturity period of 19 years and a five-year grace period, a $23 million loan from the CTF with a maturity period of 40 years and a 10-year grace period, and a $2 million interest-free CTF grant. The funds will be provided to IREDA, which, in turn, will provide sub-loans to select states to invest in various solar parks that are included in the Ministry of New and Renewable Energy’s (MNRE) solar park programme.
  • In the same month, ADB granted a loan of $200 million to Energy Efficiency Services Limited (EESL) to finance energy efficient lights and water pumps in India. EESL will provide loans to municipalities for installing LED street lights and bulbs, tube lights, electric fans and water pumps. The loan has been granted using ADB’s ordinary capital resources and will have a 20-year tenor, including a grace period of five years, with an annual interest rate determined in accordance with ADB’s London Interbank Offered Rate (Libor)-based lending facility.
  • ADB also approved a $175 million loan to Powergrid to expand its solar power transmission network. Further, ADB will provide a $50 million co-financing loan from multi-donor funding agency CTF. Powergrid will use these funds to upgrade the transmission network of the 2,500 MW solar park in Bhadla, Rajasthan, and the 700 MW solar park in Banaskantha, Gujarat. It will also back two additional sub-projects, which will increase solar power generation by 4.2 GW.
  • EIB approved a Euro 200 million loan for SBI, which will be used to develop large-scale solar projects in India. The loan has a tenor of 20 years.
  • In February, ADB signed an agreement to provide a $500 million loan to Powergrid for the development of green energy corridors. The funds will help Powergrid develop the 6,000 MW Raigarh-Pugalur high voltage direct current (HVDC) system and the 2,000 MW Pugalur-Trichur HVDC transmission line, covering Chhattisgarh, Tamil Nadu and Kerala. The total cost of the projects is $2.58 billion. ADB’s loan amount will account for 19 per cent of the total project cost, while Powergrid will provide $2.08 billion. The loan has a 20-year term, including a five-year grace period, and an annual interest rate determined in accordance with ADB’s LIBOR-based lending facility.
  • In January, ReNew Power announced a long-term debt financing of $390 million from ADB. The funds will be utilised by the company to develop and expand capacities in Andhra Pradesh, Gujarat, Jharkhand, Karnataka, Madhya Pradesh and Telangana.
  • In January, KfW provided a soft loan worth Euro 1 billion for the development of green energy corridors in India. The loan agreement for financial assistance of Euro 500 million has been signed by Powergrid for interstate transmission projects under the Green Energy Corridors project, which are likely to be completed by 2018. For intra-state transmission projects, various states have signed loan agreements with KfW for financial assistance of around Euro 500 million.

Bonds and debentures

  • In September 2017, Mytrah Energy raised Rs 18 billion from the Piramal Group’s financial services companies. The funds were invested in the form of NCDs with a tenor of seven years in two Mytrah Group entities: Mytrah Energy (India) Private Limited (Rs 9.8 billion) and Mytrah Ujjwal Power Private Limited (Rs 8.2 billion). The funds will be used to refinance the company’s debt and enable the exit of some of its current investors, such as IDFC Alternatives Limited, AION Direct Singapore Private Limited and Merrill Lynch International, before its planned initial public offering (IPO).
  • In August, IDFC Alternatives successfully raised Rs 2.5 billion (approximately $39 million) through its India Infrastructure Fund II by selling NCDs to infrastructure debt funds and financial institutions. The funds will be used to repay the company’s existing debt and refinance two solar projects recently acquired from Punj Lloyd in Punjab.
  • In July, Azure Power raised nearly $500 million through the sale of bonds to overseas investors. The issue was oversubscribed two times as investors offered to invest around $1 billion against the bond size of $500 million. This is despite the fact that Azure Power will offer a yield of around 5.5 per cent, which is less than even the primary lending rate of the Reserve Bank of India. The proceeds from the bond sale will be used to purchase rupee-denominated debentures and finance the loans of subsidiaries that directly own several solar power projects across India.
  • In July, IFC invested $103 million in L&T Infrastructure Finance Company by subscribing to the green bonds issued by it. This was in line with IFC’s strategy to support the growth of renewable energy infrastructure in India. L&T Infrastructure Finance, a wholly owned subsidiary of L&T Finance Holdings, will use the funds generated to provide loans to solar power projects.
  • In June, ADB raised $217 million by issuing offshore Indian rupee-linked, five-year bonds. The proceeds from the bonds will be used to support ADB’s lending in India. ADB’s increased activity in the rupee capital market is proving catalytic to its local currency lending programme. The orders were oversubscribed three times. This is ADB’s largest single, offshore, Indian rupee-linked bond issue.
  • During the same month, REC raised $450 million through the sale of green bonds listed on the London Stock Exchange. The bonds have a 10-year tenor with an interest rate of 3.97 per cent per annum. The bonds were oversubscribed by 3.9 times on the final order book and garnered strong investor interest internationally, with Asian investors accounting for 68 per cent of the total subscriptions and investors from the Europe, Middle East and Africa region accounting for the remaining 32 per cent of the order book. The green bond issue is the first of its kind to be traded on the London Stock Exchange’s new International Securities Market. The funds raised will be used to develop solar, wind and biomass power projects, as well as sustainable water and waste management projects in India.
  • In May, the union cabinet approved the MNRE’s proposal to raise Rs 23.6 billion in bonds through IREDA in 2017-18. These funds will be used by the MNRE for approved programmes/schemes for solar parks, green energy corridors, generation-based incentives for wind projects, central public sector undertakings and defence solar projects, viability gap funding for solar projects, rooftop solar, off-grid/grid-distributed and decentralised renewable power, and investment in corporations and autonomous bodies.
  • In May, NTPC floated its second five-year masala bond offering for Rs 20 billion in the international market. This is the eighth offering since 2006, under the company’s Rs 256.8 billion medium-term note (MTN) programme, taking the cumulative amount raised under the programme to nearly Rs 222.16 billion. The bonds are priced at a coupon rate of 7.25 per cent, payable annually.
  • In April, Fotowatio Renewable Ventures raised $29 million in NCDs from IFC to fund 100 MW of solar projects in India. FRV is developing two solar projects of 50 MW each at the Ananthapuramu Solar Park (Tranche IV) in Andhra Pradesh. The expected project cost is $119 million, which will be funded through 75 per cent debt and 25 per cent equity.
  • In March, NTPC raised Rs 20 billion through the issue of green masala bonds in the overseas market under its $4 billion MTN programme. The five-year bonds have been issued at an annual interest rate of 7.37 per cent and have been listed on the Singapore Stock Exchange and the London Stock Exchange.
  • In December 2016, Virtuaal Infra Power Private Limited entered into an agreement with Singapore-based InfraCo Asia Private Limited to raise $5 million for funding two small projects in Arunachal Pradesh. The funds are being raised through two compulsory convertible debenture facilities of up to $1.8 million and $3.2 million to facilitate project development and thereby strengthen electricity supply in the Northeast.

Private equity and venture capital

  • In October 2017, Oorjan Cleantech raised $450,000 through online seed funding in which Globevestor, a US-based venture capital firm, is the primary investor. The other investors are a group of senior officials from banks and financial services companies. The company plans to use the funds to scale up its operations, augment sales efforts and build its technology advantage.
  • In July, New York-based private equity firm Warburg Pincus invested Rs 6.5 billion in CleanMax Solar. The funds will be used by CleanMax Solar to expand its footprint in the rooftop solar and open access markets in India, the Middle East and Southeast Asia. Currently, CleanMax is reported to have a market share of 3 per cent (1,341 MW of capacity as of March 2017) in the open access solar market in India.
  •  In July, Piramal Finance, a subsidiary of Piramal Enterprises, sanctioned an additional funding of Rs 7 billion to ACME Solar Holdings Limited through its Corporate Finance Group. The funds have been approved under a new product, Flexi Line of Credit, which is aimed at making a line of funding available to the borrower based on operational projects, and providing flexibility to draw and repay funds during the tenor period. This is the second tranche of funding to ACME Solar Holdings. Prior to this, Piramal Finance, in partnership with APG Asset Management, had provided a funding of Rs 4.99 billion to ACME.
  • In April, Hareon Solar India, a wholly owned subsidiary of Hareon Power Singapore, decided to invest $76.6 million for acquiring a 45 per cent stake in Azure Power Thirty-Seven Private Limited, a wholly owned subsidiary of Azure Power. According to Hareon Power Singapore, the funds will be utilised to develop 118 MW of solar projects in Telangana.
  • Amaranto Solar Power India, the new arm of Italy-based renewable energy firm the Amaranto Group, launched an investment vehicle dedicated to acquiring PV projects in India in April 2017. It has already secured exclusive rights to purchase a 110 MW solar project that was tendered by SECI for $80 million. Amaranto will act as the general contractor for this plant via its EPC company Energia Prima. Amaranto Solar will also act as the co-investor and the industrial operator of the plant, providing O&M and asset management services. Amaranto’s aim was to raise funds worth $100 million in the first half of 2017, and another $200 million by end-2017. It is targeting to acquire 500 MW of capacity by 2018.
  • In March, solar EPC firm Oriano Solar raised a Series A funding of Rs 200 million from the Samridhi Fund, which is managed by SIDBI Venture Capital Limited. The investment comprises a mix of equity and debt. The company has so far executed over 85 MW of solar projects and will use the investment for project management, business development and working capital requirements.
  • In March, Actis Capital raised funds worth nearly $2.75 billion, of which it has kept aside $500 million for investing in solar and wind power projects. It recently acquired Solairedirect India from French utility Engie. Another key investment of the fund in India is the acquisition of Ostro Energy, which won 250 MW of capacity in the recently concluded auctions for wind power projects. Actis plans to build a 2 GW solar power portfolio.


  • The Indian Energy Exchange’s IPO, which opened for subscription on October 9, 2017, received bids for 12.05 million shares on the third and final day of the bidding and was oversubscribed  2.28 times. The board of directors had allocated 0.79 million equity shares at Rs 1,650 per share to 23 anchor investors including SBI Mutual Fund (MF), Birla Sunlife MF, ICICI Prudential MF, and Nomura. The price band of the IPO was fixed at Rs 1,645-Rs 1,650 per share. The IPO subscription closed on October 11, 2017.
  • In September 2017, ACME Solar Holdings filed preliminary papers with the Securities and Exchange Board of India to raise Rs 22 billion through its IPO, at a face value of Rs 10 per share. The company is considering a pre-IPO placement of up to 5,222,079 equity shares to investors for up to Rs 5 billion. The company’s IPO will be managed by ICICI Securities, Citigroup Global Markets India, Deutsche Equities India and Link Intime India Private Limited. Out of the funds raised, around Rs 4,356.9 million will be used to repay debt to Primal Finance and Innovador Traders, and Rs 5,410 million to ACME Cleantech, while Rs 8,690 million will be used to finance the company’s 200 MW solar power project in Bhadla.

Mergers and acquisitions

  • In October 2017, Adani Enterprises Limited (AEL) announced plans to demerge its renewable energy business into its associate company, Adani Green Energy Limited (AGEL), to simplify its overall business structure. The boards of the two companies have approved the demerger scheme and AGEL will be listed on the Bombay Stock Exchange and the National Stock Exchange. According to a company statement, AGEL plans to issue 761 new equity shares for every 1,000 equity shares of AEL and the existing equity shares held by AEL in AGEL will be cancelled. However, all shareholders of AEL will be provided direct shareholding in AGEL. The demerger is expected to be closed by the first quarter of 2018, depending on regulatory approvals.
  • In August, Sembcorp Industries entered into an agreement to acquire the remaining 28 per cent stake in Sembcorp Green Infra (SGI), a wind and solar project developer, from IDFC Private Equity Fund III, at $220.2 million. With this acquisition, Sembcorp Industries will become the sole owner of SGI. This acquisition will be financed through a mix of internal funds and loans. The deal is expected to be completed in the first quarter of 2018.
  • In March, the Inox Group agreed to sell its 260 MW operating wind farms to Leap Green Energy for an undisclosed amount. Inox Renewables, a wholly owned subsidiary of Gujarat Fluorochemicals, and Inox Renewables (Jaisalmer), a wholly owned subsidiary of Inox Renewable Limited, both a part of the Inox Group, entered into definitive agreements for the sale of their operating wind farms to Leap Green Energy Private Limited, following their decision to exit the wind farm business and focus on their core businesses including wind turbine manufacturing.
  • In February, Japan-based power company JERA, a joint venture between Tokyo Electric Power and Chubu Electric Power, acquired a 10 per cent stake in ReNew Power Ventures for $200 million. With this latest round of investment, the valuation of ReNew Power has reached $2 billion. The deal has also marked the entry of Japanese investors in the Indian renewable energy market.


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