Clean Energy Firm Greenko To Raise $1 Billion Via Asia’s Largest Green Bond

Clean Energy Firm Greenko To Raise $1 Billion Via Asia’s Largest Green Bond

Less than a year after its last offering, India’s leading clean energy company, Greenko, is raising up to $1.1billion via an offshore dollar issue — the largest greenbond sale to date by a company in Asia. Proceeds will be used to refinance the company’s first dollar bond sale that fetched $500 million in 2014.

Additionally, the sale will also help the company 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 seven-year bond issue starts Tuesday. Barclays, JP Morgan, Morgan Stanley, Deutsche Bank and Investec have been mandated for the fund raising. The company is looking to raise a minimum of $950 million and a maximum of $1.1 billion, said officials on condition of anonymity as talks are still in the private domain.

The company declined to comment. Moody’s and Fitch Ratings have graded the bonds (P)Ba2 and BB-(EXP), or two notches lower than the investment grade.

The issuer of a green bond publicly states that the proceeds will fund green projects related to renewable energy or emission-reduction initiatives.

Many Indian clean-tech companies, such as ReNew, or banks or financial institutions like Axis, Rural Electrification Corporation have in recent months raised funds through this route, though the sizes of the issues were much smaller.

STRATEGIC INVESTORS
The privately held company was started by two Hyderabad-based entrepreneurs, Anil Kumar Chalamalasetty and Mahesh Kolli. It 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.

READ  GST Shines on Renewable Energy Sector

Upon closure, Greenko would have raised $2 billion of equity and debt from marque institutional investors in the last 12 months. It already has 2.5 gigawatts (GW) of operational portfolio of wind-, solarand hydro-power projects, making it one of the largest players in the country. By the end of the year, it plans to raise the capacity to 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, technically classified as a “restricted group.”

“Its last offering in June 2016 was a mega hit. The order book for a $500 million issuance was oversubscribed 8-10 times. Pension, endowments and foundations or long-only funds have always had the appetite for such paper but now even blue chip investment funds and asset managers from Blackrock and PIMCO have specific mandates from their investors to subscribe to such green papers. The interest from high net worth and retail clients is also rising,” said an official in the know.

SUSTAINABLE INVESTMENTS
“Sustainable investing strategies will likely continue to grow as demand rises,” said Ilya Serov, associate managing director, Moody’s Investors Service. “These strategies range from exclusionary practices to applying ethical, religious, environmental, social and governance considerations to investment decisions… The common aim is to generate long-term competitive financial returns while simultaneously achieving a positive social impact.”

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 India’s new-generation clean energy providers.

READ  Indian delegation meets Pakistan officials for Indus Commission

The Adani Group, IL&FS Energy, NYSE-listed Azure Power and even Continuum Energy are in various stages of issuing bonds with an aim to cumulatively raise $2 billion this fiscal alone, said industry watchers.

Global capital is also drawn to the ambitious commitment of the Narendra Modi government — a signatory to the Paris climate accord —to expand renewable power capacity, and one that is keen to invest close to $150 billion to meet the 2022 targets of 175 GW output from the current capacity of 57 GW.

RECORD BOND SALES
Poised to achieve another record year, green bond issuance had a strong first quarter (Jan-March) as volume reached $29.5billion, an increase of 75% over year-ago period, according to Moody’s Investors Service’s Green Bonds Quarterly.

The $29.5 billion in first-quarter issuance globally marked the second largest quarterly volume to date. Green bonds posted a 0.4% return, compared with a 0.3% total return for the global bond market in the first quarter.

Solar tariffs hit a new low in May when SBG Cleantech, a joint venture among 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.

 

 

Source Link – ET Energy World

Leave a Reply

Your email address will not be published.