Key Financings

Major debt and equity news

There was a steady stream of merger and acquisition (M&A) activity during the year, driven by the sale of distressed assets, consolidation and market penetration by foreign investors. A key M&A deal in the public sector space was the Power Finance Corporation’s (PFC) acquisition of a controlling stake in its state-run peer, REC Limited, in a move that will create a lending behemoth. Meanwhile, the corporate bond market gained significant traction during the year. Several companies tapped this route to raise funds to meet their expansion plans, with government securities and bonds accounting for a large proportion of the market. Banks, both local and foreign, extended long-term loans for renewable energy, energy efficiency, and expansion projects, among others. Power Line highlights the major debt and equity deals in the industry over the past 12 months….

Mergers and acquisitions

The M&A momentum continued in the power sector during the past year. Some of the key deals of the year were PFC’s acquisition of REC Limited, Adani Transmission Limited’s (ATL) acquisition of KEC Bikaner Sikar Transmission Private Limited, CLP India Private Limited’s acquisition of Kalpataru Power Transmission Limited (KPTL), and Infrastructure Leasing and Financial Services’ (IL&FS) sale of its wind assets to Japan’s Orix Corporation.

  • In August 2019, IL&FS sold seven wind energy assets to the Orix Corporation for Rs 48 billion, which will help partially reduce its debt burden of over Rs 990 billion. Orix is already an equity partner in the group and owns 49 per cent stake in each of these seven operating wind power plants.
  • In July 2019, KPTL entered into a binding agreement with CLP India to sell its stake in three power transmission assets for an enterprise value of Rs 32.75 billion. These assets are Kalpataru Satpura Transco Private Limited, Alipurduar Transmission Limited and Kohima Mariani Transmission Limited.
  • In June 2019, Brookfield acquired two wind farms from Hyderabad-based Axis Energy Ventures Private Limited for Rs 5 billion (around $72 million). The two assets have a combined generation capacity of 210 MW.
  • In June 2019, the Competition Commission of India approved the acquisition of Larsen & Toubro’s (L&T) electric and automation business by Schneider Electric India and MacRitchie Investments. The approval is subject to modifications aimed at eliminating the likely anti-competitive effects of the proposed acquisition.
  • In June 2019, the Essel Group sold the two transmission assets owned by Essel Infra Projects, Darbhanga-Motihari Transmission Limited and NRSS XXXI(B) Transmission Limited, to a fund managed by Edelweiss. Essel had entered into an agreement to sell the two assets to Sekura Energy Limited, a company owned by the Edelweiss Infrastructure Yield Plus Fund, in October 2018. Recently, in August 2019, the Essel Group also signed an agreement to sell 205 MW of operating solar assets of Essel Green Energy and Essel Infra Projects to the Adani Group at an enterprise value of Rs 13 billion. The solar assets, located in Punjab, Karnataka and Uttar Pradesh, will be acquired by Adani Green Energy Limited (AGEL).
  • In April 2019, Tata Power Renewable Energy Limited signed a binding agreement to sell 32 MW of its operating wind assets located in Satara district of Maharashtra. After fulfilling the conditions of the agreement, the assets and liabilities of the project would be transferred to the buyer, which has not been disclosed as yet.
  • In March 2019, PFC signed a share purchase agreement to acquire the central government’s entire 52.63 per cent stake in REC Limited at a cash purchase consideration of Rs 139.50 per share with a total acquisition cost of about Rs 145 billion.
  • In March 2019, Shapoorji Pallonji Infrastructure Capital completed the sale of 194 MW of its operating solar portfolio to Sprng Energy, the renewable energy arm of investment firm Actis. The divestment has been carried out to redeploy capital for the development of new solar projects.
  • In February 2019, ATL acquired KEC Bikaner Sikar Transmission Private Limited at an enterprise value of Rs 2.27 billion. With this acquisition, ATL has around 13,450 ckt. km of power transmission lines in its portfolio.
  • In December 2018, NTPC Limited announced the completion of the acquisition of the 720 MW Barauni thermal power plant in Begusarai district in Bihar from Bihar State Power Generation Company Limited. The station has two units of 110 MW each, which are under renovation and modernisation, while two other units of 250 MW each are under construction. The acquisition is a part of the MoU signed in May 2018 with the Bihar government for the transfer of three power projects.
  • In November 2018, ENGIE acquired 90 per cent stake in Simpa Energy India Private Limited and is investing to fund geographic expansion and accelerate growth. ENGIE acquired the controlling stake from the parent company, Simpa Networks, Inc.
  • In November 2018, Canadian Solar acquired the remaining 51 per cent stake in two solar power ventures it had with the Suzlon Group, Amun Solar Farms and Avighna Solar Farms. Earlier, Canadian Solar had picked up a 49 per cent stake in each of these ventures for a total of Rs 264.2 million. It has now bought the remaining stake for a total of Rs 281.1 million from Suzlon.
  • In October 2018, Greenko Energy Holdings signed a definitive purchase agreement with Skeiron Green Renewables to acquire 385 MW of the latter’s wind power projects at an enterprise value of about Rs 35 billion.

Major loan agreements

In the past one year, key power sector players such as NTPC Limited, NHPC Limited, PFC and Energy Efficiency Services Limited (EESL) borrowed funds from domestic banks and overseas financial institutions.

  • In July 2019, Reliance Power Limited’s (RPower) loan of Rs 24.3 billion from the Export-Import Bank of the United States for the Samalkot gas-based project in Andhra Pradesh was restructured. The maturity of the loan was extended to June 2022 and the mortising repayment schedule was converted into bullet repayments with an interest rate of 2.65 per cent per annum. RPower had scrapped the power purchase agreement (PPA) of the project and revoked the liquidated damages claim amounting to Rs 4 billion. The company is looking to relocate the Samalkot modules to Bangladesh, where it is at advanced stages of developing a 750 MW combined cycle power project and LNG terminal.
  • In July, 2019 PFC raised $300 million through a three-year syndicated loan from the State Bank of India (SBI), Hong Kong, and MUFG Bank Limited, Singapore.
  • In April 2019, NTPC signed a term loan agreement for Rs 20 billion with Canara Bank and earlier, in February 2019, it signed a term loan agreement for Rs 50 billion with SBI. Both the loan facilities were extended at an interest rate linked to the three-month marginal cost of funds-based lending rate (MCLR) of the banks. The loan has a door-to-door tenor of 15 years.
  • In January 2019, EESL raised its first long-term rupee loan for Rs 5 billion. The seven-year loan has a two-year moratorium and the interest rate is linked to the Punjab National Bank’s MCLR at 8.45 per cent per annum.
  • In December 2018, NHPC signed a Rs 5 billion term loan agreement with SBI. The loan has a tenor of 10 years with a three-year moratorium period and the rate of interest is linked to the one-year MCLR at 8.5 per cent.
  • In September 2018, Coastal Gujarat Power Limited (CGPL) completed the refinancing of outstanding external commercial borrowings amounting to Rs 55 billion through a mix of rupee-denominated debt instruments and equity funding from the proceeds of the divestment of non-core assets of the company.

Stressed assets

Resolution of stressed assets remained work in progress during the past year. The market witnessed several stressed asset sale transactions. Some large cases of distressed companies were resolved outside the National Company Law Tribunal (NCLT).

  • In July 2019, the NCLT approved NHPC’s Rs 9.07 billion bid for Lanco Teesta Hydro Power Limited. As per the resolution plan, NHPC will pay Rs 8.77 billion to Lanco Teesta Hydro Power’s financial creditors and Rs 0.11 billion to its operational creditors. NHPC will fund the deal through a debt-equity ratio of 70:30.
  • In May 2019, GMR Infrastructure executed a bilateral resolution plan with the lenders for its 768 MW gas-based power plant in Rajahmundry in Andhra Pradesh. Under the plan approved by all 12 lenders to the project, the existing debt of Rs 23.53 billion has been reduced to a sustainable debt of Rs 14.12 billion. The GMR Group has infused an amount of Rs 3.95 billion to meet 20 per cent of the principal towards repayment of the sustainable debt and the interest servicing obligations of the project for the first year. Accordingly, the outstanding sustainable debt will be Rs 11.3 billion and carry a floating interest rate of 9 per cent per annum, and will be repayable over 20 years.
  • In May 2019, the NCLT rejected a bid by Essar Power Jharkhand Limited’s former promoters to take the company out of insolvency by offering to pay Rs 12 billion as a one-time settlement against a total debt of about Rs 56 billion.
  • In April 2019, Adani Power Limited (APL) secured a letter of intent to acquire Korba West Power Company Limited (KWPCL) from the committee of creditors. KWPCL owns and operates a 600 MW thermal power plant (TPP) in Raigarh district of Chhattisgarh and is currently going through the insolvency resolution process under the Insolvency and Bankruptcy Code, 2016. Earlier, in January 2019, the Adani Group secured three out of seven projects under the Scheme of Asset Management and Debt Change Structure. These projects were those of Coastal Energen Private Limited (a debt of Rs 61.32 billion), KSK Mahanadi Power Limited (Rs 171.94 billion) and GMR Chhattisgarh Energy Limited (Rs 81.74 billion). However, subsequently, APL withdrew its offer to acquire the KSK Mahanadi project on account of viability concerns since Uttar Pradesh Power Corporation Limited decided to reduce the tariffs for electricity procurement.
  • In March 2019, IDBI Bank sought bids for the sale of a 30 MW solar power project in Patan, Gujarat, owned and operated by Lanco Solar Gujarat Private Limited. The total debt outstanding of the plant as on October 8, 2018 stood at Rs 3.46 billion.
  • In November 2018, Singapore-based Agritrade Resources acquired SKS Power Generation (Chhattisgarh) Limited in a one-time settlement of Rs 21.7 billion with its lenders. SKS Power Generation (Chhattisgarh) Limited is currently owned by SKS Ispat and Power Limited. SKS Power’s lenders include SBI, L&T Infrastructure Finance Company and PTC (India) Financial Services.
  • In November 2018, IDBI Bank initiated insolvency proceedings against Konaseema Gas Power Limited, which operates a 445 MW gas-based power plant at Ravulapalem, Andhra Pradesh, owing to a payment default. Along with a Rs 1.5 billion overseas credit line, the bank had extended several other facilities such as term loans, taking the total dues to about Rs 6.63 billion.

Bond issues

Several public and private players including NTPC Limited, REC Limited, NHPC Limited, Coastal Gujarat Power Limited (CGPL), ReNew Power, Adani Green Energy Limited and Torrent Power tapped the bond market to raise funds during the past 12 months. The largest of these deals was REC’s $5 billion medium term note (MTN) programme.

  • In September 2019, THDC India Limited issued Series II corporate bonds worth Rs 15 billion with a base issue size of Rs 5 billion and a greenshoe option of Rs 10 billion. The company received bids for Rs 32.15 million for the issue at a coupon rate of 8.75 per cent.
  • In July 2019, ReNew Power raised $300 million through a rights issue of compulsorily convertible preference shares, which would be converted into equity at later stages. Goldman Sachs, the Abu Dhabi Investment Authority (ADIA) and the Canada Pension Plan Investment Board (CPPIB) subscribed to the issue with each of the shareholders infusing $100 million into it. Earlier, in March 2019, the company completed a green bond issue of $375 million.
  • In July 2019, NTPC raised Rs 43 billion through a bond issue for meeting its capital expenditure and general corporate needs. The issue had a base size of Rs 5 billion and a tenor of 10 years. Bids were received for Rs 93.59 billion. Earlier, in January 2019, NTPC raised Rs 40 billion via bonds issued through private placement. Also, in October 2018, NTPC’s foreign currency bonds and masala bonds were listed on NSE IFSC’s debt securities market. It raised $2,400 million, Euro 500 million and Rs 40 billion by issuing bonds in different tranches under its $6 billion MTN programme. NTPC raised another $450 million through a five-year bond offering in the international market under the MTN programme in March 2019.
  • In June 2019, CGPL raised Rs 11.1 billion through the issuance of non-convertible debentures (NCDs) on a private placement basis. The NCDs carry a coupon rate of 9.15 per cent payable annually. Earlier, in September 2018, the company raised Rs 27 billion through the issuance of NCDs on a private placement basis.
  • In June 2019, AGEL issued and listed $500 million of green bonds. This was the first issuance by a private non-banking company on the Global Securities Market. The company had raised the funds at a coupon of 6.25 per cent in the overseas debt sale.
  • In May 2019, Torrent Power raised Rs 2.7 billion by issuing NCDs on a private placement basis. A total of 27,000 NCDs of Rs 100 million each were issued by the company at a coupon rate of 10.25 per cent per annum.
  • In February 2019, NHPC Limited issued secured, redeemable, non-cumulative, non-convertible and taxable X Series bonds on a private placement basis with an issue size of Rs 15 billion. The bonds have a tenor of 10 years from the deemed date of allotment, including a moratorium period of three years, and a coupon rate of 8.65 per cent per annum.
  • In December 2018, NRSS XXIX Transmission Limited raised Rs 30 billion by issuing bonds on a private placement basis. The project-specific SPV’s infrastructure comprises three 400 kV double circuit transmission lines and one 400/220 kV gas-insulated switchgear substation to deliver over 1,000 MW of electricity from Punjab to the Kashmir Valley.
  • In October 2018, REC launched a global MTN programme worth $5 billion in the global securities market. More recently, in May 2019, the company raised about Rs 11 billion through its AAA-rated bonds, which have a maturity period of two years and seven months at 8.5 per cent interest per annum.
  • In September 2018, North Eastern Electric Power Corporation Limited received bids worth Rs 135 million, against the offered amount of Rs 3 billion, for the sale of bonds through e-bidding. The bonds have a term of seven years with a coupon rate of 9.25 per cent.

Equity moves

On the equity side, a key deal was Sterlite Power Grid Ventures bringing in global private equity major KKR as a co-sponsor in the India Grid Trust (IndiGrid), an infrastructure investment trust. This deal marks KKR’s first infrastructure investment in the Asia-Pacific region.

  • In August 2019, Sterling and Wilson Solar Limited (SWSL) received bids for nearly 19 million shares for its initial public offering (IPO) of 22.17 million shares, excluding the anchor portion. The issue was subscribed only 0.85 times. Under the qualified institutional buyer category, the issue has been subscribed 1.02 times. Under the non-institutional investor category, which includes corporate houses and affluent individuals, it has been subscribed 0.89 times while in the retail individual investor category, the IPO has been subscribed 0.3 times.
  • In July 2019, Greenko Energy Holdings secured funding of $329 million (about Rs 22.55 billion) from the General Insurance Corporation (GIC) and ADIA. Greenko received $495 million (about Rs 33.92 billion) as primary equity from GIC and ADIA. Overall, it secured a total equity commitment of $824 million (about Rs 56.34 billion) from its existing shareholders.
  • In May 2019, CPPIB signed an MoU with Piramal Enterprises Limited (PEL) to form a $600 million Renewable Energy Trust. The infrastructure investment trust (InvIT) will seek to acquire 1.5-2 GW of stable and cash-generating renewable energy assets comprising both wind and solar in India. Both PEL and CPPIB will act as co-sponsors of the proposed trust and hold up to 75 per cent of the units, with CPPIB committing $360 million and holding up to 60 per cent units and PEL committing $90 million and holding up to 15 per cent.
  • In May 2019, IndiGrid announced the closing of a preference unit issuance worth Rs 25.14 billion ($363 million). As part of the transaction, KKR and GIC invested Rs 10.84 billion ($157 million) and Rs 9.8 billion ($142 million) respectively to collectively own 42 per cent of IndiGrid’s outstanding units. KKR has also applied to become a sponsor of IndiGrid and plans to acquire an additional 15 per cent of IndiGrid’s total units from Sterlite Power. With this, KKR and GIC will collectively own about 57 per cent of IndiGrid’s outstanding units.
  • In April 2019, global PE fund Warburg Pincus and the International Finance Corporation (IFC)-backed CleanMax Solar raised Rs 2.75 billion from UK Climate Investments. Earlier, in 2017, CleanMax had secured equity financing of up to Rs 7 billion from an affiliate of Warburg Pincus and IFC.
  • In April 2019, Bajaj Energy Limited (BEL) filed the draft red herring prospectus for its IPO to raise Rs 54.5 billion. The offer comprises a fresh issue of shares of up to Rs 51.5 billion by BEL and an offer for the sale of equity shares by Bajaj Power Ventures aggregating Rs 3 billion.
  • In March 2019, the Greenko Group signed an agreement with Siemens Financial Services for 46 per cent equity in its 200 MW Poovani wind power project in Tamil Nadu.
  • In December 2018, Hero Electric Vehicles Private Limited raised Rs 1.6 billion from Alpha Capital Advisors.

Multilateral funding

A number of multilateral loan agreements were signed with various banks including the World Bank, the Asian Development Bank (ADB), the Japan International Cooperation Agency (JICA) and KfW during the past 12 months. These pertained mainly to the renewable energy and energy efficiency segments and to power system improvements.

  • In July 2019, ADB sanctioned a project worth Rs 19.25 billion for Tripura State Electricity Corporation Limited. The project entails augmenting the capacity of the 63 MW Rokhia project to 120 MW at an estimated cost of Rs 6.99 billion and modernising the Gumti hydroelectric project at an estimated cost of Rs 12.25 billion.
  • In April 2019, Avaada Energy Private Limited (AEPL) secured financing of about Rs 10 billion ($143.8 million) in the form of equity infusions from ADB; the German development bank, DEG; the Dutch development finance company, the Netherlands Development Finance Company (FMO); and promoters’ equity. Earlier, in March 2019, ADB signed an agreement to invest $50 million in AEPL to help the company scale up its solar photovoltaic capacity.
  • In March 2019, the Bank of Baroda tied up with KfW Development Bank to provide funds of Rs 8,030.34 million to refinance solar power projects under the Solar Partnership II-Promotion of Solar PV in India.
  • In November 2018, ADB and EESL signed an agreement for a $13 million grant to be provided by the Global Environment Facility, for additional financing of an ongoing ADB-supported project for promoting end-use energy efficiency. Earlier, in September 2018, the central government, the World Bank and EESL had signed a $220 million loan agreement and an $80 million guarantee pact.
  • In November 2018, the central government signed a $105 billion loan agreement with ADB to support transmission system upgrades in Himachal Pradesh for increased supply of hydropower to the state and the national grid. The loan will have a term of 25 years with a grace period of five years and the interest rate determined by the London inter-bank offered rate and a commitment charge of 0.15 per cent.
  • In November 2018, the Jharkhand government, the central government and the World Bank signed a loan agreement worth $310 million for the Jharkhand Power System Improvement Project to provide reliable, quality and affordable 24×7 electricity in the state.
  • In November 2018, West Bengal State Electricity Distribution Company Limited and JICA signed a Rs 50 billion loan agreement to finance a 1,000 MW pumped storage project in Purulia, West Bengal. The total cost of the project is estimated at Rs 69.22 billion and it is scheduled for completion by 2027.


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