Hyderabad-based renewable energy producer Mytrah Energy India Pvt. Ltd is in advanced talks to raise Rs1,800 crore in structured debt funding from Piramal Capital’s structured finance group (SFG), two people directly aware of the development said on condition of anonymity. According to them, the deal is at a term-sheet level and will be one of the largest structured debt investments by Piramal group till date. Mytrah plans to use the funds to refinance its debt and provide exits to some of its current investors such as IDFC Alternatives, AION Capital and Merrill Lynch International before its planned initial public offering (IPO). “The transaction will go towards refinancing the company’s debt in various special purpose vehicles (SPVs),” said the first of the two people cited above. “Apart from refinancing, the funds will also go towards funding projects at various stages of development,” the person added.
Emails sent to Mytrah Energy and separate emails and text messages sent to Shirish Navlekar, joint managing director and chief financial officer at Mytrah Energy, went unanswered. Piramal declined to comment. Mytrah Energy is one of the largest private firms in the renewable energy sector—it operates about 920 megawatts (MW) of wind energy projects and recently won bids to develop about 500MW of solar energy capacity. At least two of Mytrah’s existing investors, which include AION Capital and IDFC Alternatives, are keen to exit before the IPO, said the second of the two persons cited above. In September, Mint reported that Mytrah Energy has hired investment banks Nomura Financial Advisory and Securities (India) Pvt. Ltd and IDFC Bank Ltd to start working on a public listing that could see the firm raise between $250 million and $300 million.
IDFC Alternatives, the asset management arm of IDFC Ltd, invested Rs350 crore in Mytrah in 2011 while AION Capital, a special situations fund, along with Merrill Lynch International, invested Rs400 crore in 2015. According to disclosures made by Mytrah Energy, its finance cost increased by $16 million by end June 2016 to $42.16 million, largely due to a higher interest on newly commissioned operating assets. In a recent report, credit ratings agency India Ratings said Mytrah Energy has refinanced existing debt of 543MW of projects and in the process raised another Rs300 crore which was used to fund the promoter’s contribution requirements for capex. “By exploiting the tail period of these operational projects, the company has leveraged the balance sheet of the SPVs and raised additional debt. This has substantially increased the debt levels of the consolidated entity to about Rs6,200 crore from close to Rs5,200 crore at end-FY16,” the report said.
Piramal Capital has been largely active in the mid-market space and the potential transaction marks a shift towards higher value deals. Mint reported in March that Piramal was in talks to invest up to Rs1,500 crore in Krishnapatnam Port Co. Ltd (KPCL) to enable the firm’s promoters to buy private equity fund 3i Group Plc. “With the number of funds active in the mid-market space going up significantly in the past one year, that’s one of the primary reasons why Piramal is now looking at deals of bigger size of more than Rs1,000 crore where the competition is less,” the first person said, adding: “Apart from KKR there aren’t too many funds who can routinely fund such large transactions.” Currently, Piramal Fund Management manages or advises funds over Rs8,000 crore on the equity side and Rs4,000 crore of gross disbursements on the debt side. This includes six domestic funds, one offshore fund and three third party mandates.