GIC-backed Greenko Kicks Off Roadshows For Up To $1b Bond Sale

Renewable energy firm Greenko Group is meeting investors to raise up to $1 billion in a dollar bond sale, said two people aware of the development, requesting anonymity.

One of the largest renewable energy companies in India, Greenko is owned by sovereign wealth funds GIC of Singapore and Abu Dhabi’s Abu Dhabi Investment Authority (ADIA).

According to the first person cited above, the company is looking to raise $750 million to $1 billion through bonds to refinance debt for a part of its operational assets. “Investor road shows were started on Monday. The issue size is likely to be closer to $1 billion, depending on the demand,” he added.

On Monday, rating agency Fitch assigned an expected rating of ‘BB-(EXP)’ to the proposed US dollar notes of Greenko. “The rating of the proposed notes reflects the credit profile of a restricted group, which comprises 15 operating subsidiaries and the issuer that are all indirectly owned by Greenko. The restricted group has an operating capacity of 949MW wind (85%) and solar (15%) power generation,” the rating agency said in a note.

Greenko owns operating assets of 4.2 gigawatts (GW) and under-construction assets of 7 GW. It had raised $1 billion through dollar denominated bonds in 2017.

Greenko will use the proceeds of the proposed notes to refinance the project-level debt or acquisition borrowings of the operating subsidiaries, Fitch added.

“All assets within the restricted group are operational. About 77% of the capacity started operations more than two years ago, with the rest operating for at least a year. However, higher reliance on more-volatile wind resource is a risk to cash flow estimates. The projects are diversified across seven Indian states, limiting regulatory risks,” Fitch noted.

The proposed bond sale follows the recent equity infusion of $329 million into Greenko by GIC and ADIA, reported by Mint on 12 July. This followed a $495 million investment in June 2018.

The two sovereign funds have so far infused $2.2 billion in Greenko, which was founded by Mahesh Kolli and Anil Kumar Chalamalasetty.

A spokesperson for Greenko could not immediately be reached for comment.

Greenko’s proposed bond issuance comes at a time when Indian companies have been busy raising debt from overseas markets to take advantage of lower interest rates.

Last year, Indian companies had raised $6.3 billion through dollar denominated bonds, down 51.7% from the previous year as the number of bond sales more than halved, according to data from Thomson Reuters.

Companies that have tapped the offshore bond market this year include IndusInd Bank Ltd, which raised $400 million (around ₹2,700 crore) in April through a benchmark three-year issuance, at a coupon rate of 3.875% per annum. In January, India’s largest lender, State Bank of India, raised $1.25 billion through bonds sold abroad. Recently, GMR Hyderabad International Airport Ltd also raised $300 million through bonds in the offshore market to refinance debt of its parent firm, GMR Infrastructure Ltd, while renewable power producer ReNew Power Ltd raised $375 million through dollar-denominated green bonds.

On 16 July, Adani Ports and Special Economic Zone Ltd said it has begun a tender offer to buy back bonds worth $650 million due next year. The company is also issuing new bonds of at least $650 million, proceeds of which will be used for the buyback of the bonds due in 2020.

This article was first published on livemint.com