Key Financings: Major debt and equity moves

Financing activity has picked up pace in the power sector, driven by India’s ambitious plans of ac­hieving 500 GW by 2030. In the past year, the sector has witnessed some significant fundraising through commercial loans and green bond issuances, mainly in the renewa­bles space. For global investors, India re­mained a priority market for renewable energy growth.

Power Line presents a round-up of the major financing moves during the past 12 months…

Mergers and acquisitions

The sector witnessed several merger and acquisition (M&A) deals in the past 12 months, especially in the transmission and clean energy segments. The acquisitions in both these segments were led by Adani and IndiGrid.

In August 2023, Adani Energy Solutions Limited (AESL) (erstwhile Adani Trans­mis­sion Limited) acquired an under-development transmission project from Megha Engineering and Infrastructures Limited. It bought 100 per cent equity sh­ares of the special purpose vehicle (SPV) at a face value of Rs 10 each. The KPS1 project includes the implementation of the KPS1-Khavda PS GIS 765 kV double-circuit line and augmentation of Khavda PS1.

Earlier, in October 2022, AESL acquired the second tranche (25 per cent stake) in Alipurduar Transmission Limited from Kalpataru Power Transmission Limited (KPTL). With this, KPTL has transferred about 74 per cent of the total equity sha­res of Alipurduar Transmission, with an agreement to sell the remaining 26 per cent to AESL, after obtaining requisite regulatory and other approvals.

In August 2023, the Hyderabad bench of the National Company Law Tribunal (NCLT) approved a resolution plan submitted by Vedanta Limited for Meenak­shi Energy Limited. According to the pl­an, Meenakshi Energy’s creditors will be paid a sum of Rs 14,400 million.

In May 2023, IndiGrid approved the ac­quisition of 100 per cent units of Vires­cent Renewable Energy Trust (VRET) at an enterprise valuation of Rs 40 billion. VRET is India’s first and only renewable energy infrastructure investment trust, comprising a portfolio of 16 operational solar projects through 14 SPVs across se­ven states and with a cumulative capa­city of 538 MWp.

Earlier, in March 2023, IndiGrid completed the acquisition of 100 per cent shareholding and economic interest in Khar­gone Transmission Limited from Sterlite Power Transmission Limited, at an enterprise value of around Rs 15 billion.

Meanwhile, in December 2022, IndiGrid and G.R. Infraprojects Limited (GRIL) entered into a framework agreement to acquire 100 per cent stake in Rajgarh Transmission Limited, which GRIL had won in March 2022. GRIL will develop and execute the project while IndiGrid will operate and manage the asset post the acquisition from GRIL from its commercial operation date. The project is a part of the strategic partnership anno­un­ced by IndiGrid and GRIL to jointly bid for identified tariff-based competitive bidding transmission projects agg­re­gating about Rs 50 billion.

In March 2023, JSW Neo Energy Limited, a wholly owned subsidiary of JSW En­ergy Limited, completed the acquisition of 1,753 MW of renewable energy as­s­ets from Mytrah Energy (India) Private Limited. The acquisition includes 15 SPVs and 13 ancillary SPVs with a total installed renewable energy capacity of 1,449 MW.

In January 2023, Adani Renewable Ener­gy Holding Two Limited, a wholly owned subsidiary of Adani Green Energy Limi­ted (AGEL), entered into a binding term sheet for the acquisition of 50 per cent equity interest in Essel Saurya Urja Co­mpany of Rajasthan Limited (ESUCRL) from Essel Infraprojects Limited. The acquisition comprises a cash consideration of Rs 150 million. ESUCRL owns and operates a solar park with 750 MW capacity in Rajasthan.

Earlier, in October 2022, AGEL completed a 100 per cent acquisition of the equity sh­are capital in three SPVs from Inox Gr­een Energy Services Limited. The SPVs are Wind One Renergy Limit­ed, Wi­nd Three Renergy Limited and Wind Five Renergy Limited. Each SPV has commissioned 50 MW of wind energy projects.

In December 2022, Jindal Steel and Power Limited acquired Monnet Power Com­pa­ny Limited for Rs 4.1 billion through the insolvency route. Monnet Power owns an under-construction 1,050 MW thermal power plant (TPP) in Odisha.

In December 2022, the NCLT approved the scheme of amalgamation of JMC Projects (India) Limited with KPTL. The combined entity will operate in India and 67 other countries, with offerings in diversified areas such as power transmission and distribution, buildings and factories, water, railways, oil and gas, and heavy civil infrastructure.

In November 2022, Actis Llp’s BluPine En­ergy completed the acquisition of 404 MW of solar power assets from The Atha Group. The enterprise value of the deal is Rs 20 billion. The acquisition will en­able BluPine to enhance its renewable energy portfolio to 4 GW over the next four to five years.

In November 2022, Sembcorp Green In­fra Limited signed an agreement with In­dia Infrastructure Fund II to acquire 100 per cent interest in Vector Green ­En­ergy Private Limited for a base equity consideration of Rs 27.8 billion. Vector Green operates renewable power assets across 13 states and its portfolio includes 495 MW of solar capacity and 24 MW of wind capacity in operation, and 64 MW of solar projects under development.

In October 2022, Hitachi Limited signed a share transfer agreement for acquiring the remaining 19.9 per cent shares from ABB Limited, pursuant to the acquisition agreement signed on December 17, 2018. Hitachi has exercised its call option, agreed to by the two parties in December 2018.

In September 2022, Reliance Industries Limited entered into definitive agreements with SenseHawk, Inc., for acquiring 79.4 per cent stake of SenseHawk for a total consideration of $32 million. SenseHawk, an early-stage California-based developer of software-based ma­na­gement tools, helps solar power projects, from planning to production, by en­abling companies to streamline pro­cesses and use automation.

Major loan agreements

In the past 12 months, several key players in the power sector have secured sizeable loans and funds for diverse purposes. Some prominent agreements in­cluded funding by REC and PFC for various projects, and loan agreemnts with global partners.

In August 2023, AESL ac­hieved financial closure for a $1 billion green HVDC link project, which will ensure uninterrupted supply of renewable energy in Mum­bai. The credit facility is part of a the $700 million revolving project finan­ce facility tied up in October 2021 for its under-construction transmission assets portfolio. The banking consortium for the fi­nancing framework comprises ni­ne international banks -including DBS Ba­nk Limited, In­tesa Sanpaolo S.p.A., Mi­­zu­ho Bank Limited, MUFG Bank Limi­ted, Siemens Bank GmbH, Société Géné­rale, Standard Chartered Bank, Sumito­mo Mitsui Ban­king Corporation and The Hong Kong Mortgage Corpora­tion Limited.

In July 2023, PFC signed various MoUs for over Rs 2.37 trillion worth with 20 companies in both the public and private sectors. These MoUs were signed with solar, wind power, green hydrogen, battery storage and electric vehicle companies as well as the with manufacturers of green energy equipment manufacturers, amo­ng others, in the clean energy space. Ada­ni, Greenko, ReNew, Continu­um, Avaada, JBM Auto, Megha Engine­ering and Infra­structure Limited, and Rajasthan Rene­wable Energy Corpo­ration Limited were some of the companies with whom PFC signed MoUs.

In July 2023, the ACME Group secured a Rs 40 billion loan from REC Limited for its green hydrogen and green ammonia project in Oman. The loan will be uti­li­sed to commence the first phase of the green hydrogen and green ammonia project, to be established at the special economic zone (SEZ) in Duqm, Oman. The first phase of the facility is expected to produce 100,000 tonnes of green ammonia annually, which will be inc­re­ased to 1.2 million tonnes per annum, with about 3.5 GW of electrolyser capacity, which will be powered by a 5.5 GWp of the solar photovoltaic plant.

In May 2023, the Avaada Group raised $1.07 billion from Brookfield Rene­wable to fund its green hydrogen and green ammonia business in the country as a part of its ongoing $1.3 billion fundraising plan. Brookfield Renewable, through its Brookfield Global Transition Fund, will be investing up to $1 billion in Avaada Energy.

In January 2023, REC signed several st­rategic MoUs. The first MoU was signed with the MP Power Management Com­pany Limited to extend financial assistance of Rs 150.86 billion for the upcoming Sarani and Amarkantak thermal power projects, system improvement works, technology upgradation, and re­novation and modernisation. The second MoU was signed with Rewa Ultra Mega Solar Limited wherein REC will commit a sum of Rs 10 billion as financial assistance for the development of renewable energy parks/projects and/or the associated infrastructure including power evacuation.

In the same month, REC signed non-binding MoUs with the Uttar Pradesh government to extend financial assistance for various projects. The projects include a Rs 141.03 billion power generation project with a capacity of nearly 3,000 MW, pollution control equipment and allied works; transmission projects of Rs 78 billion for strengthening the tra­nsmission system and network in Uttar Pradesh; a distribution project of Rs 136 billion for strengthening infrastructure, reducing AT&C losses and providing quality and affordable power to all; a renewable energy project of Rs 453.5 billion for the addition of 10,000 MW of capacity; and multiple infrastructure development projects in the state worth Rs 200 billion across various sectors.

In January 2023, Sterlite Power achieved financial closure for its Kishtwar Trans­mission Limited (KTL) project located in Jammu & Kashmir. It has successfully secured the entire debt funding of Rs 3.05 billion from Aseem Infrastruc­ture Finan­ce Limited, promoted by the Strategic Op­­p­ortunity Fund of the National In­vestment and Infrastructure Fund, with anchor investments from the Gover­n­ment of India and Japan’s Sumitomo Mitsui Banking Corporation.

In December 2022, SJVN Green Energy Limited achieved financial closure of its 1,000 MW solar power project under ex­ecution in Bikaner, Rajasthan. The project’s total cost of Rs 57.24 billion is being financed at a debt-equity ratio of 80:20. The entire debt of Rs 44.45 billion has been tied up with the Indian Renewable Energy Development Agency (IREDA).

In December 2022, AGEL, through its subsidiary Adani Solar Energy AP Six Pri­vate Limited, raised a JPY-denominated facility to refinance its debt. The facility will amortise the project loan facility of JPY 27.95 billion and assess the 16-year debt structure with a door-to-door tenor of 10 years and an average tenor of more than eight years. MUFG Bank and Sumitomo Mitsui Banking Corporation will support the transaction in equal participation as principal lenders for the facility.

In October 2022, REC and PFC signed a memorandum of loan agreement (MoA) with SJVN Thermal Private Limited for financing its 2×660 MW coal-based Buxar TPP. The total estimated project cost is Rs 121.73 billion, with a debt requirement of Rs 85.21 billion.

Bond issuance

It was a gainful year of gains for the power sector in the bond market. A number of key market players issued bonds in the past 12 months for the purpose of refinancing and raising funds. Major players issued green bonds in both the national and international stock markets.

In June 2023, RattanIndia Power Limited raised Rs 11.25 billion from a consortium of lenders, which the company will utilise to refinance its debt. Of the total, Kotak Investment Advisors has invested Rs 7.32 billion in the company, while the remaining is from domestic institutions and family offices.

In June 2023, Torrent Power Limited rais­ed Rs 6 billion through the issuance of Series 11–60000 secured, rated, listed, ta­x­able, non-cumulative and redeemable non-convertible debentures (NCDs) at a coupon rate of 8.5 per cent per annum.

In May 2023, REC Limited undertook an exclusive listing of green bonds of $750 million raised under its Global Medium-Term Programme of $7 billion at the Gujarat International Finance Tec-City (GIFT) International Financial Services Centre (IFSC) stock exchanges. The bond issue saw an oversubscription of around 3.5 times from 161 investors. Investors from across the globe participated in the issue, with Asia  Pacific accounting for 42 per cent, Europe, the Middle East and Africa accounting for 26 per cent, and the US for 32 per cent.

In April 2023, ReNew Energy Global Plc’s whollyowned subsidiary, Diamond II Limited, raised $400 million through the issue of senior secured green bonds. The green bonds received witnessed strong demand from investors in the US, Europe and Asia. The corporate style notes carry a US Dollar coupon rate of 7.95 per cent. The proceeds from the issue will be used to refinance the existing dollar debt and fund various growth initiatives.

In February 2023, NHPC Limited raised Rs 9.96 billion through the issuance of unsecured, redeemable, non-convertible, non-cumulative and taxable AD series bonds on a private placement basis. The company allotted the 7.59 per cent per annum bonds on February 20, 2023 for 15 years, with a maturity date of February 20, 2038.

In February 2023, the Indore Municipal Corporation’s non-convertible green municipal bonds were oversubscribed 5.91 times, generating a total of Rs 7.21 billion. The issue has a face value of Rs 1,000 each. The base issue size was Rs 1.22 billion, with an option to retain ov­er­subscription up to Rs 1.22 billion, aggregating up to Rs 2.44 billion. This is the firstever public issue of municipal bonds that will be utilised to fund the setting up of a solar power plant.

In February 2023, NTPC Green Energy Limited (NGEL) invited bids for a rupee-denominated term loan of up to Rs 90 billion. NGEL intends to raise fresh debt and repay the outstanding liability of Rs 82 billion to NTPC Limited. Additional fun­ds of about Rs 8 billion will be required for additional debt liability and for balance capex payments of projects that are yet to achieve full commercial operation.

In December 2022, Tata Power Com­pa­ny Limited raised Rs 10 billion through the issuance of unsecured, redeemable, ra­t­ed, listed and taxable NCDs on a private placement basis. The maturity of Series I NCDs worth Rs 5 billion is scheduled on January 8, 2030, while the maturity of Series II NCDs worth Rs 5 billion would will be on December 29, 2032. These are fixed rate NCDs with an annual coupon payment.

In October 2022, Suzlon Energy Limited’s rights issue resulted in the subscription of 4.35 billion shares, leading to an oversubscription of 1.8 times. According to the company, the issue size was 2.40 billion partly paid-up equity sh­a­res for cash, at a price of Rs 5 per rights equity share (including a premium of Rs 3 per rights equity share), aggregating up to Rs 12 billion on a rights basis to its eligible equity shareholders in the ratio of 5 rights equity shares for every 21 fully paid-up equity shares.

Equity moves

The year witnessed some major initial public offering (IPO) announcements by IREDA, and Sterlite Po­wer. The segment also saw some no­table equity investments, with foreign investors picking up stakes in industry majors including the Adani Group.

In July 2023, the Adani Group anno­un­ced that GQG Partners had acquired ad­ditional equity shares in Adani Trans­mission Limited, AGEL and AEL. With this, GQG Partners’ shareholding in AGEL and ATL has increased to 6.54 per cent; and in AEL to 5.4 per cent of the paid-up capital of the company.

In June 2023, the Avaada Group anno­un­ced the successful closure of a $1.3 billion funding round. This funding round is the largest equity round ever raised by any green energy company in Asia. The funding will be used to bolster Avaada’s green hydrogen, green methanol, green ammonia, solar manufacturing and renewable power generation ventures.

In May 2023, Serentica Renewables sig­ned definitive agreements with global investment firm Kohlberg Kravis Rober­ts (KKR) for an investment of an additional $250 million in the company. Ear­lier, in November 2022, Serentica Rene­w­ables secured an investment of $400 million from KKR. With this, the company is planning to install 4,000 MW of renewable energy capacity.

In March 2023, NTPC Limited completed the transfer of 15 renewable energy assets to NGEL, its wholly owned subsidiary, through a business transfer ag­reement for a consideration of Rs 100.67 billion. Further, NTPC has completed the transfer of 100 per cent equity shareholding in NTPC Renewable Energy Limited to NGEL through a share purchase agreement for Rs 7.31 billion.

In March 2023, GQG Partners announ­ced the completion of a Rs 154.46 billion investment in a series of secondary blo­ck trade transactions in the Adani portfolio companies. The companies include Adani Ports and Special Econo­mic Zone Limited, AGEL, Adani Transmission Li­mi­ted and AEL. The in­vestment has made GQG a key investor in the development and growth of critical Indian infrastructure.

In March 2023, the Cabinet Committee on Economic Affairs approved the listing of IREDA on the stock exchanges through an IPO. This will be done through a part-sale of the government’s stake in it. The aim is to raise funds for IREDA through the issue of fresh equity shares.

In January 2023, the Indian Energy Exchange Limited (IEX) opened the buyback of equity shares of up to Rs 980 million at a price not exceeding Rs 200 per share through the open market route. The company announced the closure of share buyback with effect from March 16, 2023. Till March 15, 2023, IEX bought back a total of 6,976,798 fully paid-up equity shares and the total amount utili­sed towards the buyback was Rs 979.8 million, which represents 99.99 per cent of the maximum buyback size.

In December 2022, the Inox Gujarat Fluorochemicals Limited (GFL) group raised around Rs 15 billion across its entities to pare its debt. Around Rs 7.4 billion was raised through an IPO of Inox Green Energy Services Limited, which has largely been utilised towards debt repayment. In addition, the promoters have raised Rs 7.2 billion through the sale of GFL shares. The sale proceeds of Rs 6.23 billion (net of expenses and taxes) have been infused in Inox Wind Limited.

In October 2022, the Life Insurance Corporation of India (LIC) diluted its shareholding in NHPC Limited from 7.23 per cent to 5.203 per cent of the paid-up capital of NHPC for Rs 7.01 billion. It has sold over 2.027 per cent of its holdings in NHPC during the period March 17, 2022, to October 18, 2022, at an average cost of Rs 34.42. Further, LIC sold over 2.003 per cent of its holdings in Power Grid Corpo­ration of India Limited (Powergrid) for Rs 30.79 billion. As a result, LIC’s shareholding in Powergrid has reduced from 5.303 per cent to 3.3 per cent of the paid-up capital of the company.

Multilateral finance deals

The power sector saw a number of multilateral deals being concluded for pow­er infrastructure development with in­ter­national organisations and banks su­ch as the World Bank, the Asian Deve­lo­p­ment Bank (ADB) and the Asian Infra­structure Investment Bank (AIIB).

In July 2023, the World Bank approved $1.5 billion in financing to accelerate In­dia’s development of low-carbon energy. The First Low-Carbon Energy Prog­ram­matic Development Policy Operation – the first in a series of two envisaged ope­rations – will support India in developing green hydrogen.

In July 2023, Genus Power Infrastructures Limited signed definitive agreements wi­th Gem View Investment Private Li­mited, an affiliate of GIC, Singapore, for setting up a platform for undertaking advanced metering infrastructure service provider concessions. GIC will hold 74 per cent sta­ke in the platform while Genus will ho­ld 26 per cent stake.

Earlier, in May 2023, Genus Power In­frastructures Limited signed a commitment letter with the United States Inter­national Development Finance Corpora­tion to obtain a loan of up to $ 49.5 million to scale up the deployment of electric smart meters across India.

In June 2023, the World Bank approved a loan of $200 million to the Government of Himachal Pradesh government to facilitate power sector refor­ms in the state and increase the share of renewable energy in the state’s electricity generation. The $200 million loan from the International Bank for Re­con­struction and Development has a final maturity of 14.5 years, including a grace period of 4.5 years.

In June 2023, CleanMax Enviro Energy So­­l­utions Private Limited raised $360 mi­ll­ion from Brookfield Renew­able, through the Brookfield Global Transition Fund. The funding is a mix of primary and secondary capital and will enable CleanMax to grow its platform to over 5 GW over the next three to four years.

In June 2023, Amp Energy India secured up to $250 million in funding to support its growth. The investment co­mes fr­om prominent financial institutions, including the Sumitomo Mitsui Ba­n­k­ing Cor­poration Bank of Japan (SMBC), the In­termediate Capital Gro­up (ICG), and the Asian Infrastruc­ture Invest­me­nt Bank (AIIB).

In April 2023, the International Finance Corporation (IFC) announced that it is investing Rs 3,750 million (about $50 million) in a sustainability-linked bond (SLB) issued by Tata Cleantech Capital Limited.

In April 2023, the ADB and Tata Power-DDL entered into an agreement to subscribe to non-convertible debentures NCDs for Rs 1.5 billion to enhance Delhi’s power distribution through grid enhan­ce­ments, and a $2 million grant to partially finance the purchase and integration of a pilot BESS.

In March 2023, SJVN Limited secured green finance of Rs 9.15 billion from the Japan Bank for International Cooperati­on to fund its 90 MW Omkareshwar flo­a­ting solar power project in Madhya Pra­desh and the 100 MW Raghanesda solar power project in Gujarat.

In January 2023, ADB and the Govern­ment of India signed a $220 million loan to improve the energy security, quality of supply, efficiency and resilience of the power sector in Tripura.

In January 2023, the new Norwegian Climate Investment Fund, managed by Norfund, together with KLP, made the first investment of Rs 900 million in an Indian transmission project in Karna­ta­ka, being developed by ReNew Power. Norfund and KLP will invest around Rs 900 million for 49 per cent ownership stake in ReNew’s transmission project in Koppal, Karnataka, with ambitions for further joint investments.

In December 2022, MUFG Bank Limited executed a Rs 4.5 billion sustainable tra­de finance facility for Tata Power. This is the first sustainable trade finance fa­cility offered by MUFG in India. The credit fa­cility was extended by MUFG for funding the procurement of two solar power projects under TP Kirnali Limi­t­ed. The projects include a 100 MW project in Par­thur, Maharashtra, and a 120 MW pro­ject in Mesanka, Gujarat.

In December 2022, Kerala secured a Rs 8.17 billion loan from KfW for the im­plementation of the green energy corridor projects of Kerala State Electricity Board Limited.

In November 2022, the State Bank of In­dia was granted an additional Euro 150 mi­llion (Rs 12.4 billion) low-interest lo­an by Germany’s KfW Development Ba­nk to fund solar projects in India.

In November 2022, the Bank of America extended approximately Rs 8 billion to ReNew Power. The five-year rupee-deno­minated green loan facility will help the company lower its funding costs as the proceeds will primarily be used to prepay an existing offshore loan before its scheduled repayment date.