Renewable energy company KPI Green Energy is set to raise Rs 3,200 crore ($363.39 million) through a loan from the State Bank of India, says a Reuters report. The company is borrowing a large amount to expand its production capacity at its renewable power plants, top KPI executives told Reuters on Tuesday.
The company is raising the funds via a 20-year loan at an interest rate of 8.45 per cent from the largest bank of the country, which will be disbursed in a staggered manner over the next 1.5 years, KPI Green Energy’s Chief Financial Officer Sahil Yahoo told Reuters.
KPI’s growth plans
The loan approval comes amid the Indian government’s green energy push targeting 500 gigawatts of non-fossil capacity by 2030, and, according to analysts, stands out as one of the larger deals in the sector’s recent history.
KPI Green Energy develops, builds, and manages renewable power facilities, specialising in solar, wind and hybrid power solutions.
“By 2027, we will finish all our projects in hand in IPP”, said Chairman and Managing Director Dr. Faruk G. Patel, referring to its Independent Power Producer business, “which will generate about 10 billion rupees in revenue.”
KPI issues green bond
The company also issued its first green bond on Tuesday, planning to raise 6.7 billion rupees at a coupon of 8.5% per annum.
The rupee-denominated five-year bond was externally credit-enhanced – its rating was given a boost by a 65% guarantee from GuarantCo, a Private Infrastructure Development Group (PIDG) company.
“Without the guarantee, we would have had to pay a 14-15% coupon to raise funds via equity or quasi-equity instruments,” Patel said.
The guarantee effectively raised the instrument’s credit rating from A+ to AA+ rating by CRISIL and ICRA, Yahoo said.
Aseem Infrastructure Finance subscribed to a majority of the bonds, while Jio Finance and SBI Capital Markets took the rest, Yahoo added.
SBI Capital Markets was the sole arranger for the issue, the executives said.