ReNew has secured a project loan of ₹2,700 crore from the State Bank of India for its 403 MW Peak Power Project, signalling that local lenders that lost money having advanced large funds to power plants a decade ago are finally beginning to extend loans to them – but to only those with a robust equity component in the capital structure.
To be sure, Petronas’ clean energy subsidiary, Gentari, recently acquired a 49% equity stake in this project.
The loan has a tenor of 20 years and the interest rate charged is in the range of 8.75% to 9.25%. Under the partnership for this project, ReNew has said it will invest around ₹313 crore ($38 million) for its 51% stake in the project and through affiliates, will provide EPC, O&M, and project management services for the project.
When contacted Kailash Vaswani, president-corporate finance at ReNew, said that the project loan from SBI shows the growing interest of PSU lenders in renewable projects. “This long-term loan allows us to keep borrowingcosts low as we prefer floating rates over fixed in the current interest rate environment. Currently, domestic borrowing rates are 150-175 basis points lower than USD fixed rates, making it a favourable option,” he said.
An SBI spokesperson did not immediately respond to a request for comment.
The company plans to regularly refinance operational projects to extend repayment periods, increase borrowing limits, and reduce overall debt service requirements. ReNew has been refinancing dollar borrowing with onshore borrowing. During FY23, ReNew refinanced $525 million in the domestic markets in addition to the repayment of $480 million of debt from internal cash flow generation.
In April, ReNew raised $400 million at the holding company level by paying a 7.95% coupon. ReNew’s $325 million 5.375% bond is due in April 2024. There are five other bonds issued at both restricted group and hold level, which are due in FY27 and onwards.The weighted average interest cost of their borrowings exclding letters of credit and buyer’s credit was 9.30% for FY23.
Nasdaq-listed ReNew’s clean energy portfolio of 13.4 GWs includes wind at 6.4 GW, solar at 7.2 GW and hydro at 0.1 GW. The company’s total borrowings which consisted of long-term interest-bearing loans and borrowings including current maturities of long-term interest-bearing loans and borrowings and short-term interest-bearing loans and borrowings was ₹53,040 crore including compulsorily convertible debentures of ₹1,699 crore, as of March 2023, according to the company’s financial statement.
Recently, ACME Solar secured a debt of ₹4,000 crore from REC to fund the green ammonia and green hydrogen projects in Oman.
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