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ReNew Power founder Sumant Sinha. Pradeep Gaur
ReNew Power founder Sumant Sinha. Pradeep Gaur

ReNew’s $325 mn dollar bond offering sees strong demand

  • The company raised the bonds at the cheapest pricing till date for its paper, despite the ongoing pandemic

ReNew Power Pvt. Ltd has raised $325 million selling bonds to foreign investors, in the first dollar bond offering by an Indian renewable energy company since the covid-19 disruption.

Mint reported on 16 October that ReNew aims to raise debt through offshore bonds. The company raised the bonds at the cheapest price till date for its paper, despite the ongoing pandemic. “We started out with 5.875% and then we tightened it down to 5.375%. The order book was close to $2 billion," said Kailash Vaswani, president, corporate finance, ReNew Power.

The bond offering saw strong investor demand from the US. “Besides traditional investors, the ESG aspect helped in attracting many investors from around the world," said D. Muthukumaran, chief financial officer, ReNew Power. On Friday, international rating agency Moody’s Investors Service said it has assigned a Ba3 rating to the proposed bonds to be issued by India Green Energy Holdings, a financing entity set up for the fundraise.

India Green will use the proceeds from the dollar bonds to subscribe to seven-year non-convertible debentures (NCDs) to be issued by 11 restricted subsidiaries, which are either wholly-owned or majority-owned subsidiaries of ReNew Power, the rating agency said. These subsidiaries comprise solar and wind projects of over 400 megawatts (MW) capacity.

The proceeds from the NCDs will be used by the restricted subsidiaries to refinance existing debt, pay related transaction costs and fund a 750 crore loan (approximately $100 million) to ReNew Power. In January, ReNew Power had raised $450 million through a dollar bond issuance.

“As a borrower, they have a fairly large capital requirement. For them to diversify their sources of capital is a key objective behind their strategy to raise funds from the offshore market," said a person aware of the firm’s fundraising plans. Of total debt of $4.5 billion, almost $2 billion is now from dollar bonds, the person said.

“The market conditions had worsened after covid hit in March. So they were closely monitoring the market trying to see when the right opportunity is available. In these circumstances you have to be ready without even assuming that a deal is possible and then when the market conditions are right, you quickly go ahead with the issuance," the person said.

Indian issuers had raised $20.7 billion in 2019, the most in six years, through offshore bond sales, and another $10 billion in the first half of the 2020 calendar year. Only a handful of firms have tapped the market in the last few months, including REC Ltd, UPL Ltd, Adani Ports, and Vedanta Resources.

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