MUMBAI: Vector Green Energy, a PE backed firm, is raising about Rs 1,200 crore via green bonds in the domestic market as it plans to retire high-cost debt and add capacity. If the proposed sum is raised in one tranche, it could well be India’s largest local green bond sale by a triple-A rated entity.
ESG (Environment, Social and Governance) is the flavour of the season from Tokyo to Toronto, and Indian firms raising committed debt overseas are riding the wave to significantly lower costs and bring on board a wider set of investors.
Vector Green has assets that are expected to generate revenues from projects mandated by Solar Energy Corp and NTPC. This helps win investor confidence due to cashflow visibility.
The company is said to be in talks with Axis Bank and ICICI Bank, which are helping raise the money, market sources said.
“The company will use the proceeds to pay off such long-term debt and fund expansions with the residual money,” said a senior executive involved in the processes.
Bonds may be offering 6.40-6.80 percent, with three-year maturity.
The company took an 18-year long term loan last year from three lenders including Axis Bank, and National Investment Infrastructure Fund (NIIF), originally at 9.40 percent. The bonds refinancing will help save funding costs significantly.
The group has likely formed a restricted group of six Special Purpose Vehicles (SPVs) issuing bonds with a kind of portable corporate guarantee for all. It has earmarked 350 MW non-conventional projects in states including Uttar Pradesh, Rajasthan, Maharashtra, Madhya Pradesh and Karnataka. The loan was taken for those projects, which will now be prepaid using bond proceeds.
“The company looks keen to have three-year maturity papers as it would be economical for them instead of going for five-year papers,” said one of the persons involved in the processes.
Those subsidiaries include Yarrow Infra, Sepset Construction, RattanIndia Solar, Malwa Solar, Priapus Infra and Citra Real.
“The rating reflects strong revenue visibility and counterparty profile, co-obligor structure of SPVs providing diversity benefit and healthy financial risk profile,” Crisil said in a note on April 14. “These strengths are partially offset by exposure to risks inherent in operating solar energy assets and refinancing risk.”
Vector Green Energy owns and operates 750 MWp of well-diversified portfolio of renewable assets across wind, utility scale and rooftop solar projects spread across 19 ground mount project sites and nearly 200 rooftop project sites across a dozen states in India.
Vector Green is 100% owned by funds managed by Global Infrastructure Partners India (GIP), one of the leading global infrastructure fund managers managing a global portfolio of over US $ 71 billion.