Key Financings

Major debt and equity moves

The power sector has witnessed a flurry of financial activity in the past year. In a key development, the central government announced a Rs 900 billion liquidity infusion package for distribution companies to help them clear their outstanding dues and provide them financial stability during the Covid-induced economic crisis. Meanwhile, the corporate bond market gained significant traction during the year, with the first dollar bonds being issued by a private utility in India. Further, a series of merger and acquisition (M&A) deals were signed. The year also saw power majors taking up the infrastructure investment trust (InvIT) route. Banks, both local and foreign, continued to extend long-term loans for renewable energy, energy efficiency and strengthening projects.

Power Line highlights the major debt and equity deals in the industry over the past 12 months…

Mergers and acquisitions

The M&A space gathered momentum in the power sector during the past year. Some of the key deals of the year in the generation segment were Adani Power Limited’s (APL) acquisition of the Odisha Power Generation Corporation (OPGC), Renascent Power’s 75 per cent stake acquisition in Prayagraj Power, and the sale of Infrastructure Leasing and Financial Services’ (IL&FS) wind assets to Japan-based Orix Corporation.

  • In September 2020, the RattanIndia Group sold its solar power plants with a combined capacity of 306 MW to Global Infrastructure Partners for about Rs 16.7 billion. The RattanIndia Group’s solar asset portfolio comprises ground-mounted solar assets of 297 MW in Karnataka (Pavagada), Maharashtra (Katol), Rajasthan (Bhadla) and Uttar Pradesh (Allahabad and Bareilly) and 9 MW of rooftop solar projects across 10 cities.
  • In September 2020, Larsen & Toubro (L&T) announced the closure of the strategic divestment of its electrical and automation business to Schneider Electric. L&T had signed a definitive pact with Schneider Electric in May 2018 to sell its electrical and automation business for an all-cash consideration of Rs 140 billion, as part of its long-term strategy to exit non-core activities.
  • In August 2020, Ayana Renewable Power Private Limited acquired 100 per cent equity stake in two solar PV power plants with a total capacity of 40 MW developed by First Solar. The two projects are located in Karnataka and will supply energy to Chamundeshwari Electricity Supply Corporation Limited and Gulbarga Electricity Supply Company Limited under 25-year power purchase agreements.
  • In August 2020, IndiGrid completed the acquisition of Gurgaon Palwal Transmission Limited from Sterlite Power at an enterprise value of Rs 10.8 billion. Prior to this, in May 2020, IndiGrid signed an agreement to acquire Jhajjar KT Transco’s transmission assets in Haryana from Kalpataru Power Transmission Limited and Techno Electric & Engineering Company Limited for Rs 3.1 billion. The deal was funded through a mix of debt and internal accruals. Meanwhile, in April 2020, IndiGrid announced the acquisition of Sterlite Power’s transmission asset, East North Interconnection Company Limited, worth $134 million. It consists of two 400 kV transmission lines spanning 900 ckt. km across Assam, Bihar and West Bengal.
  • In August 2020, the Competition Commission of India approved the acquisition of 100 per cent stake in C&S Electric Limited by Siemens Limited. Post the closure of the deal, the scope of C&S Electric’s business will include low voltage (LV) switchgear components and panels, LV and medium voltage (MV) power busbars as well as protection and metering devices.
  • In July 2020, Hitachi Limited completed 80.1 per cent investment in ABB Limited’s power grid business, following the acquisition agreement signed on December 17, 2018. The new company, Hitachi ABB Power Grids Limited, has begun operations.
  • In June 2020, APL signed a definitive agreement to acquire a 49 per cent stake in the OPGC from the AES Corporation, a US-based global energy company, for $135 million. APL will acquire a total of 8.9 million equity shares, representing 49 per cent of OPGC’s total issued, paid-up and subscribed equity share capital. The balance 51 per cent stake is owned by the Odisha government.
  • In April 2020, Sterlite Power concluded the sale of three assets in Brazil worth BRL 566 million – Arcoverde, Novo Estado and Pampa. Acquired by an investment fund Vinci Energia, the Arcoverde project has been in operation since May 2019. The Novo Estado project has been acquired by ENGIE Transmissão de Energia Participações, while the Pampa project has been acquired by FIP BrasilEnergia and CYMI Construções.
  • In April 2020, global investment firm KKR signed a definitive agreement with Shapoorji Pallonji Infrastructure Capital (SP Infra) to acquire its five solar energy assets totalling 317 MWp for a total consideration of Rs 15.54 billion, of which 169 MWp of assets are in Maharashtra while 148 MWp of projects are located in Tamil Nadu.
  • In April 2020, Tata Power concluded the sale of its entire 50 per cent stake in South African joint venture (JV) Cennergi (Pty) Limited to Exxaro Resources Limited for around Rs 6.59 billion. Cennergi was a 50:50 JV between Exxaro, a leading South African coal producer, and Khopoli Investments Limited, a wholly owned subsidiary of Tata Power. Exxaro will be wholly owned by Cennergi.
  • In April 2020, IL&FS completed the sale of its wind energy business to its Japanese partner Orix Corporation. IL&FS has sold its 100 per cent stake in IL&FS Wind Power Services Limited to Orix for Rs 606 million.
  • In February 2020, Adani Green Energy Limited (AGEL) and Total Gas & Power Business Services SAS entered into a binding arrangement for the acquisition of 50 per cent stake and other instruments in a JV, which will house 2,148 MW of operating solar projects, at an investment of around $510 million. Prior to this, the JV was 100 per cent owned by AGEL. The balance 50 per cent stake in the JV will be held by AGEL.
  • In February 2020, KEC International Limited, through its arm KEC Towers LLC, acquired a transmission tower manufacturing facility in Dubai with a capacity of 50,000 tonnes per annum for Rs 1 billion, during an auction sale conducted by the Emirates Auction Authority.
  • In January 2020, Yes Bank acquired a 30 per cent shareholding in Reliance Power Limited’s subsidiary, Rosa Power Supply Company, upon the invocation of pledged shares. Rosa Power operates a 1,200 MW coal-based power project in Shahjahanpur, Uttar Pradesh.
  • In December 2019, Resurgent Power Ventures Pte, a JV of Tata Power and ICICI Bank, through its wholly owned subsidiary Renascent Power Ventures Private Limited acquired a 75 per cent stake in a 1,980 MW coal-based electricity generation unit at Prayagraj, Uttar Pradesh. With this, it has taken over Rs 60 billion of the debt of Prayagraj Power Generation Company Limited (PPGCL), which owns and operates the power plant.

Major loan agreements

In the past one year, several majors such as NTPC, Reliance Power and SJVN Limited Arun-3 Power Development Company Private Limited have borrowed funds from domestic banks and overseas financial institutions. A major development was the extension of the debt to discoms under the central government’s Rs 900 billion liquidity infusion package by the Power Finance Corporation (PFC) and REC Limited.

  • Under the central government’s Rs 900 billion liquidity package announced for the stressed power distribution utilities, REC Limited and PFC have sanctioned over Rs 680 billion worth of loans (as of August 2020). As of September 11, 2020, Rs 250 billion worth of loans have been disbursed. In view of the high demand for credit, the package is likely to be hiked to Rs 1,250 billion.
  • In July 2020, Reliance Power and Japan-based JERA Co. Inc., which are developing a 745 MW natural gas combined cycle power project at Meghnaghat, Bangladesh, signed a loan agreement for full financing of $642 million. The loan has been signed with a consortium of banks including the Japan Bank for International Cooperation.
  • In February 2020, NTPC Limited raised a syndicated Japanese yen loan worth $750 million, the largest sum raised by any Asian corporate from the offshore Samurai loan market. This was also the highest single foreign currency loan raised by NTPC. In December 2019, NTPC had signed a term loan agreement for Rs 50 billion with the State Bank of India (SBI).
  • In February 2020, SJVN Limited Arun-3 Power Development Company Private Limited signed agreements with banks to secure finance for the 900 MW Arun III hydropower project, which will cost around Rs 68.8 billion. Five Indian banks, SBI, Exim Bank, Punjab National Bank, Canara Bank and Union Bank of India, and two Nepalese banks – Everest Bank and Nabil Bank – are involved in providing finance for the project.
  • In December 2019, the Indian Renewable Energy Development Agency (IREDA) announced its plans to set up a $100 million green window for financing renewable energy projects. IREDA plans to allocate $20 million for the proposed green window and plans to leverage about $80 million from other agencies to establish the facility.


During the past year, power majors Powergrid and Tata Power firmed up plans to launch their InvITs.

  • In September 2020, Powergrid received approval from the Cabinet Committee on Economic Affairs to undertake the monetisation of its assets acquired under tariff-based competitive bidding (TBCB) through an InvIT. This includes assets that are under construction and those that will be acquired by the company in the future. Initially, Powergrid is expected to monetise five TBCB assets with a gross block of Rs 71.64 billion. In December 2019, Powergrid had appointed four investment bankers – Axis Capital, ICICI Securities, HSBC and Credit Suisse – to manage the issue.
  • In August 2020, Sterlite Power sold its 14.7 per cent stake in India Grid Trust (IndiGrid) for Rs 8.4 billion at a unit price of Rs 98 to institutional and high net worth individual investors. In addition, Sterlite Power reiterated its commitment to execute asset transfers of about Rs 65 billion as per the framework agreement.
  • In July 2020, Tata Power selected seven out of 15 investors for its InvIT. The seven investors that will enter the due diligence phase are Petronas, Mubadala, Brookfield, CDPQ, KKR, APG and Omers. The company is expected to launch the InvIT by the second quarter of 2020-21. In June 2020, Tata Power’s board has given in-principle approval to set up an InvIT for its renewable energy portfolio.

Stressed assets

The resolution of stressed assets remained as work in progress during the past year. Some large cases of distressed companies were resolved by the National Company Law Tribunal (NCLT). Power generation company RattanIndia Power resolving its dues with lenders through a one-time settlement scheme was the highlight of the year.

  • In October 2019, NHPC Limited signed an agreement with a committee of creditors for availing of a loan worth Rs 45 billion from PFC and REC for reviving the 500 MW Lanco Teesta project in Sikkim. With this, NHPC has become the first PSU to take over a stressed asset through a resolution process approved by the NCLT. NHPC would pay Rs 9.07 billion for the Teesta project.
  • In August 2020, Manikaran Power Limited signed an MoU with South Korean enterprise Korea Plant Service & Engineering (KEPCO KPS) to acquire and operate stressed power plants in India. KEPCO KPS provides operations and maintenance (O&M) services for thermal, nuclear and hydro energy projects in Korea aggregating 52,000 MW. It has an overseas O&M portfolio of about 6,000 MW. Manikaran Power Limited has a Category I power trading licence in India.
  • In March 2020, Suzlon Energy received approval from lenders led by SBI to restructure its debt worth Rs 140 billion. The bankers have agreed in principle to the plan for converting the company’s sustainable debt into equity, require banks to write off part of its unsustainable debt, and have promoter entities infuse around Rs 4 billion equity into the company.
  • In January 2020, the NCLT ordered the liquidation of Essar Power Jharkhand Limited (EPJL) after the sole bidder for the company, Lighting Solutions LLC, refused to furnish a performance bank guarantee. EPJL had planned to set up a 1,200 MW coal-based power plant in the Latehar district of Jharkhand in 2008. Essar Power Jharkhand, which has a total debt of around Rs 56 billion, was admitted into insolvency in 2017 on a plea issued by ICICI Bank for defaulting on a payment of nearly Rs 36.3 billion.
  • In December 2019, PTC India Financial Services (PFS) received Rs 1.45 billion from PPGCL as part of the resolution of its stressed loan account. PPGCL owns and operates a 1,980 MW coal-based power project in Uttar Pradesh, which had become a non-performing asset due to financial and operational stress. The project has now been acquired by Renascent Power Ventures Private Limited. PFS also expects to receive Rs 70 million as per the agreement.
  • In December 2019, the NCLT ordered the liquidation of Lanco Babandh Power Limited. This would result in losses to the lenders as about Rs 80 billion is overdue from the company. The bankruptcy court removed the resolution professional for the company and appointed a liquidator to sell off the assets. The company has two thermal units with a capacity of 660 MW each in Dhenkanal, Odisha.
  • In December 2019, the NCLT also initiated a corporate insolvency resolution process for ReGen Powertech, a Chennai-based wind turbine manufacturer. ReGen stopped making turbines in 2018 after the central government notified the auction mechanism for awarding wind energy projects. It took up O&M work, which was inadequate to sustain the company.
  • In December 2019, RattanIndia Power Limited closed a one-time settlement scheme for debt resolution with its consortium of 12 lenders led by PFC and SBI. The existing lenders have assigned the principal debt of Rs 65.74 billion to a set of new investors and lenders led by Goldman Sachs and Varde Partners (through Aditya Birla ARC Limited) for Rs 40.5 billion.
  • In September 2019, Jaiprakash Power Ventures Limited received shareholders’ approval to issue preference shares worth Rs 40 billion to its lenders. The offer includes the issue of 0.01 per cent cumulative compulsory convertible preference shares aggregating up to Rs 40 billion to lenders in one or more tranches on a preferential basis.

Bond issues

Several public and private players including NTPC Limited, NHPC Limited, THDC India Limited, PFC Limited, REC Limited, L&T Limited and Adani Transmission Limited (ATL) have tapped the bond market to raise funds during the past 12 months. The year saw the first dollar bond issuance by a private utility in India, as Adani Electricity Mumbai Limited (AEML) successfully raised $1 billion from the offshore bond markets.

  • In July 2020, NTPC raised Rs 10 billion through the issuance of unsecured non-convertible bonds in the form of debentures, on a private placement basis at a coupon rate of 6.29 per cent per annum and with a door-to-door maturity of 10 years, eight months and 11 days on April 11, 2031. In April 2020, NTPC Limited raised Rs 43.74 billion through a private placement of unsecured non-convertible bonds in the form of debentures at a coupon of 6.55 per cent per annum and with a door-to-door maturity of three years and one day.
  • In January 2020, PFC issued $750 million bonds for 10.25 years under the Reg S and 144 A route. The bonds have a fixed coupon rate of 3.95 per cent per annum and a yield of 4.066 per cent. With this offering, PFC has become the first Indian public sector company to issue senior unsecured US dollar bonds with a tenor of over 10 years.
  • In May 2020, REC raised $500 million by issuing overseas bonds. These bonds are direct, unconditional and unsecured obligations of the issuer and will rank pari passu with each other and with all other unsecured obligations of the issuer. The bonds will be listed on the international securities market of the London Stock Exchange, Singapore Exchange, India International Exchange and NSE IFSC. In December 2019, REC had raised $500 million by issuing unsecured notes. The notes will mature on December 12, 2024, and all principal and interest payments will be made in US dollars.
  • In April 2020, NHPC Limited raised Rs 7.5 billion through a private placement of bonds at a coupon rate of 6.8 per cent per annum for a loan tenor of 10 years. The issue was oversubscribed 3.87 times. In March 2020, NHPC raised bonds worth Rs 5 billion through private placement. The funds were raised through the private placement of secured, redeemable, taxable, non-cumulative, non-convertible NHPC AA-1 Series bonds at a coupon rate of 6.89 per cent.
  • In April 2020, L&T raised Rs 12.5 billion through the issuance of non-convertible debentures (NCDs). The company issued and allotted 12,500 rated listed unsecured redeemable NCDs at a coupon rate of 7.2 per cent per annum. The NCDs, worth Rs 12.5 billion (Rs 1 million each), will mature on April 20, 2023. Recently, L&T also raised Rs 38 billion through the allotment of 51,500 rated listed unsecured redeemable NCDs.
  • In March 2020, ATL raised $90 million on a private placement basis. The $90 million US-denominated fund has been raised by ATL’s six wholly owned subsidiaries as part of its $400 million fundraising plan. With this, ATL now has 30-year, 10-year and 17-year papers in the market.
  • In February 2020, AEML, a wholly owned subsidiary of ATL, completed the issuance of bonds worth $1 billion with an oversubscription of 5.9 times. This is the first USD bond issuance by a private integrated utility player from India. The placement consists of a 10-year paper with a bullet maturity. The company reached a broad range of investors through the 144A and Reg S format, with the US accounts picking up 29 per cent of the bonds. Apart from this, 43 per cent were allocated to Asia and 28 per cent to Europe, the Middle East and Africa.
  • In September 2019, THDC India Limited’s corporate bond issue was oversubscribed by six times, receiving bids for Rs 32.15 billion from investors against an issue size of Rs 15 billion, with a base issue size of Rs 5 billion and a greenshoe option of Rs 10 billion. The coupon rate discovered was 8.75 per cent for a tenor of 10 years.

Equity moves

On the equity side, a significant development was APL announcing its intention to delist the company’s shares from Indian stock exchanges.

  • In July 2020, APL received shareholders’ approval to voluntarily delist the company from the bourses. According to the Adani Group, nearly 84 per cent of its public institutional shareholders voted on the resolution, of which around 96 per cent favoured delisting. In February 2020, Adani Transmission sold a 25.1 per cent stake in its arm AEML to the Qatar Investment Authority (QIA) for Rs 32.2 billion. The total QIA investment includes an equity consideration of around Rs 12.1 billion and a shareholder subordinated debt of Rs 20.1 billion.
  • In July 2020, Enel Green Power finalised a deal with the Norwegian investment fund, Norfund to bankroll, build and operate new renewable projects in India. Under the deal, Enel’s green power unit will develop and build the projects, which will be jointly financed and governed by Enel and Norfund.
  • In May 2020, IL&FS invited expressions of interest (EoIs) to divest 26 per cent of the issued and outstanding shares of ONGC Tripura Power Company Limited owned by IL&FS Energy Development Company Limited (IEDCL) and IL&FS Financial Services Limited (IFIN). Of the 26 per cent, IL&FS holds 12.03 per cent and IFIN 13.97 per cent.
  • In February 2020, the central government sold a 3.12 per cent stake (308.7 million equity shares) in NTPC through CPSE ETF, which has reduced the government’s shareholding to 51.02 per cent.
  • In December 2019, PROPARCO, a French development financial institution, made an equity investment of Rs 1.07 billion in Avaada Energy Private Limited. Avaada has 405 MW of large-scale operational solar projects in India and about 1 GW of projects under development.
  • In December 2019, JSW Energy Limited entered into an agreement with Jaiprakash Power Ventures Limited (JPVL) to restructure a principal outstanding amount of Rs 7.52 billion owed by JPVL. Under the agreement, an amount of Rs 3.52 billion will be converted into JPVL’s equity shares at a par value of Rs 10 each. Of the balance outstanding principal amount of Rs 4 billion, Rs 2.8 billion will be written off and Rs 1.2 billion will continue as debt to be paid by JPVL to JSW Energy.
  • In November 2019, the UAE-based Masdar Clean Energy invested around $150 million in Hero Future Energies (HFE). This is the second such strategic investment in HFE after 2017, when an investment of $125 million was made by the International Finance Corporation.
  • In September 2019, Bajaj Energy Limited received the Securities and Exchange Board of India’s approval to raise about Rs 54.5 billion through an initial public offering (IPO). The IPO will comprise fresh issuance of shares aggregating up to Rs 51.5 billion and an offer for the sale of scrips up to Rs 3 billion by Bajaj Power Ventures.

Multilateral finance deals

A number of multilateral loan agreements were signed with the Asian Development Bank (ADB), the Asian Infrastructure Investment Bank (AIIB) and KfW Development Bank, among others, during the past 12 months for developing renewable energy, promoting energy efficiency and strengthening the transmission and distribution infrastructure.

  • In August 2020, KfW Development Bank agreed to extend a soft loan of Rs 6 billion to West Bengal State Electricity Distribution Company Limited for the first phase of the upcoming 125 MW solar park project in the Purba Medinipur district of the state. The 15-year loan extended by KfW will carry an interest rate of 0.15 per cent and cover 80 per cent of the total project cost of Rs 7.5 billion.
  • In April 2020, ADB approved a $346 million loan to the Indian government to provide reliable power connections in the rural areas of Maharashtra. The loan will support the state government’s high voltage distribution system programme for new grid-connected rural agricultural customers across the state. The programme will also build institutional capacity at Maharashtra State Electricity Distribution Company Limited.
  • In December 2019, ADB and the Government of India extended a $250 million loan to Energy Efficiency Services Limited (EESL) to drive energy efficiency investments in India that will benefit agricultural, residential and institutional consumers. In addition to this, the Clean Technology Fund will provide $46 million financing, which will be administered by ADB.
  • In December 2019, the AIIB approved a $65 million loan for HFE’s 250 MW solar power project in Jodhpur, Rajasthan. The company will develop the project through its SPV, Clean Solar Power (Jodhpur) Private Limited. The project is expected to generate 616 MWh of electricity by 2022.
  • In November 2019, PFC Limited signed a loan agreement with KfW for Euro 200 million, as financial assistance from the Federal Republic of Germany. PFC will on-lend these funds for the development of the distribution infrastructure of state-owned companies. The loan carries a concessional rate of interest and will help PFC fund state discoms and reduce their cost of borrowing.

Akanksha Chandrakar and Nikita Gupta


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