ReNew Power, Gurugram-based renewable energy independent power producer (IPP), has raised US$ 375 million through the issue of a green bond. The proceeds from the issuance will be used for refinancing of outstanding external commercial borrowings and as Capex in eligible green projects.
The five-year non-call two notes were offered at a yield of 6.67% per annum.
The bond offer has been rated as BB by Fitch Ratings.
Barclays (B&D), Goldman Sachs, HSBC, J.P. Morgan and YES Bank were the book runners for the green bond issue. The US dollar denominated bonds received excellent response and were fully subscribed by leading fund managers/asset managers, banks and pension/life funds from across the U.S., Europe and Asia, according to a press release by the company.
The issue was opened for subscription on March 05, 2019 and closed on the same day.
Speaking about the offer, Sumant Sinha, Chairman and Managing Director, ReNew Power said, “The renewables market in India is firmly established and is growing rapidly. ReNew Power is India’s largest IPP with more than 7000 MW of commissioned and under construction wind and solar projects. Our history of financial prudence, investing in high quality assets and creating value for all our stakeholders has enabled us to regularly raise funds to fuel our rapid growth. We are happy that our bond offering received such an enthusiastic response, especially when the renewables sector is facing challenges in raising capital.”
Kailash Vaswani, Deputy CFO, ReNew Power added, “The Bond issue was in line with our strategy of diversifying debt sources. The issuance enabled us to fix our interest rate risk and achieve a lower pricing than existing borrowing costs. The international bond investors have seen us deliver on committed performance and hence have come forward to invest in our new issuance.”
Green bonds: A very attractive route to raise finance
India has set a 175 GW by 2022 target for renewables. Even though the government has set yearly targets, and also dispensing budget through Central Finance Assistance program, green projects have always been delayed because of insufficient funding.
“To overcome this challenge and also get the funding at lower interest rates, Green bonds were introduced in India. Foreign investors with an objective of sustainable and renewable energy investment, are very much interested in India. It’s also a lucrative investment with guaranteed long-term returns for foreign investors,” Dharmendra Kumar, analyst-solar energy department at IHS Markit told pv magazine last year.
“Green bonds also come with the assurity of investment being used only for green projects. At the same time, these come with low interest rates and long-term repayment scheme,” he added.