Less than a year after its last offering, India’s leading clean energy company, Greenko, is raising around $1 billion via offshore dollar bonds — the largest green bond from a corporate entity in Asia till date. The objective of this fund raising exercise is to refinance the company’s first dollar bond that raised $500 million in 2014. Additionally, it will also help the company to refinance the debt that it inherited along with the acquisition of the 350 MW India portfolio of the bankrupt Sun Edison last year.
Greenko’s 7 year bond issue will be launched on Tuesday. It will be a minimum of $950 million to a little above $1 billion, said officials in the know.
Barclays, JP Morgan, Morgan Stanley, Deutsche Bank and Investec have been mandated for the fund raising.
The issuer of a green bond publicly states that the capital being raised to fund green projects related to renewable energy or emission reduction initiatives. Many Indian clean tech companies like ReNew or banks or financial institutions like Axis, Rural Electrification CorporationBSE 3.69 % (REC) have in recent months raised funds through this route, though of smaller amounts.
The privately held company that was started by two Hyderabad-based entrepreneurs, Anil Kumar Chalamalasetty and Mahesh Kolli counts Singapore’s GIC and Abu Dhabi Investment Authority (ADIA) as key shareholders. GIC owns a controlling 60% interest in the company and ADIA has close to 15%. The two founders own the rest. It was previously listed on London’s AIM exchange.
Upon closure, Greenko would have raised $2 billion of equity and debt from marque institutional investors in the last 12 months. It already boasts of 2.5 gigawatts (GW) of operational portfolio of wind, solar and hydro power projects making it one of the largest player in the country. By the end of the year, it plans to raise it 3 GWs.
The operating portfolio is expected to generate $450 million EBITDA in FY17, sources in the know said.
For this latest round of fund raising, the company is creating a new pool of around 1 GW (1000 MW) of its diversified portfolio into an SPV.
With Indian banks hesitant to lend for new projects or having already reached their sectoral limits, offshore bonds have diversified the investor pool for most of Indian new generation clean energy providers. From Adani Group to IL&FS Energy, to NYSE listed Azure Power and even Continuum Energy are in various stages of their debt fund raising efforts with an eye to cumulatively raise $2 billion in this fiscal alone, said industry watchers.
Global capital is also getting attracted to the ambitious commitment of the Narendra Modi government — a signatory to the Paris climate accord — to expand renewable power capacity and is keen to invest close to $150 billion to meet its 2022 targets of 175 GW from a current capacity of 57 GW.
Solar tariffs hit a new low in May when SBG Cleantech, a joint venture between Bharti. Foxconn and Softbank, bid Rs 2.44 per unit for building a solar park in Rajasthan. Despite the decline in tariffs, overseas investors scouting for higher yields are keen on such dollar bond issues, bankers said, adding many were drawn by Indian Prime Minister Narendra Modi’s commitment to boosting renewable power output.