Adani Green in discussions with foreign lenders to raise $1.35 bn to fund four projects

MUMBAI: Adani Green Energy is planning to raise about $1.35 billion through an offshore loan to fund the building of four projects in the next two years in one of the largest deals in the sector since the lockdown, three people with direct knowledge of the matter told ET. The company will employ a unique ‘go-to-market’ financing plan that includes an initial loan from a group of foreign banks that will be repaid well before maturity using the proceeds of a future bond sale, backed by upcoming project revenues, they said. The renewable energy arm of the conglomerate controlled by billionaire Gautam Adani is in talks with Standard Chartered Bank, JPMorgan, MUFJ, Barclays, DBS Bank and Qatar National Bank among others, said the people cited above. “The loan is primarily for the construction of four solar and wind energy projects, which would start generating revenues in the next one and a half years,” said one of the persons cited above.77645936The banks could not be contacted immediately. The Adani Group didn’t respond to queries. The company has signed power purchase agreements (PPAs) with the Solar Energy Corporation of India (SECI) and Adani Electricity Mumbai, the group’s flagship power transmission and distribution company, for the output of the four plants. The Rajasthan-based utilities will have a total estimated capacity of 1.7 gigawatts, said the people aware of the matter. In terms of PPAs, SECI has the larger share of 1 GW. About three-fourths of the total capacity is solar while the rest is wind power. The lenders are expected to offer an offshore loan, which will be priced in proportion to the sixmonth, dollar-based London Interbank Offered Rate (Libor). The tenor of the proposed loan could be in the range of five-eight years. Terms are expected to be finalised in the next four to six weeks. Adani Green will likely avail of the loan via a subsidiary, said the people cited above. The banks will not sell down the loan from their books, in what’s known as Club Deal in market parlance. Loan syndication lenders typically sell down portions of the credit to other global institutions. “Although the loan would be a long-term one, the company will aim to repay in the next 12-24 months,” said an executive involved in the fundraising exercise. Construction is about to begin and the projects are expected to attain maturity in the next two years. This in turn will prompt the company to raise a new set of offshore bonds, which will be backed by future revenue from the projects. The proceeds of the future bond sale will be used both to repay lenders and commission projects. “Fixed-price, long-term contracted PPAs for the entire capacity and the ‘must-dispatch’ status of renewables provide good visibility of cash flows,” S&P Global Ratings said in a note on June 17. “Volatility should be limited by pool of diversified solar assets spread across different sites in India and presence of a stronger counterparty, SECI, relative to state distribution utilities.”

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