Serentica Renewables to raise ₹5,000 cr debt | Mint

Serentica Renewables to raise 5,000 cr debt

The company will use the money to build hybrid solar and wind power projects in Karnataka, Rajasthan and Maharashtra, with commissioning expected to start in 2024-25.  (Bloomberg)
The company will use the money to build hybrid solar and wind power projects in Karnataka, Rajasthan and Maharashtra, with commissioning expected to start in 2024-25. (Bloomberg)

Summary

  • Move to raise debt from local lenders after ECB route turns harder

NEW DELHI : Serentica Renewables, a renewable power company promoted by Sterlite Power, is planning to raise 5,000 crore debt from a clutch of domestic lenders, two people aware of the development said. The company will use the money to build hybrid solar and wind power projects in Karnataka, Rajasthan and Maharashtra, with commissioning expected to start in 2024-25.

This amount will be over and above the 5,600 crore that Serentica Renewables raised from Rural Electrification Corp. (REC) and Power Finance Corp. (PFC) recently, the people cited above said on condition of anonymity.

Serentica initially planned an external commercial borrowing (ECB) to raise the capital. However, the company has been facing challenges in raising the foreign debt due to concerns over its links to Anil Agarwal-led Vedanta Resources Plc.

Serentica Renewables is owned by Twin Star Holdings, a holding company that also owns stakes in London-based Vedanta Resources and Sterlite Power. The company is headed by Pratik Agrawal, who is also the managing director of Sterlite Power, which in turn is a Vedanta Group company.

“In the current scenario, there is a strong demand for renewable power assets, and Serentica has plans to ramp up its capacity further," one of the two people cited above said. “A clutch of domestic banks, including a leading private lender, are expected to be part of the consortium of lenders providing the financing," the person said.

“Serentica is working towards financial closure of its planned 4GW of renewable installations. In line with our original fundraising strategy, the financial closures are being run with a diverse set of domestic and international financial lenders which are on track. However, we cannot comment on any specific transaction or lender," a company spokesperson said.

US-based private equity KKR Investments is an investor in Serentica. In May, KKR invested $400 million in the company.

The development assumes significance as the Vedanta Group has been facing challenges due to mounting debt and a lack of refinancing options. In the last few months, rating agencies have downgraded the debt of several Vedanta Group companies. There are concerns over Vedanta Resources’ ability to repay bond repayments of $3.1 billion coming up in 2024-25, leading to a downgrade by the global ratings agency. Last week, India Rating and Research downgraded the debt rating of Vedanta Ltd to IND AA- from IND AA and placed it on rating watch with negative implications.

Vedanta Group chairman Anil Agarwal recently said in an interview that he has seen bigger problems in the past and is confident that he will overcome them.

“Serentica has close business connections with Vedanta Group, and hence the concerns unwinding in the group led to some reluctance in foreign lenders for ECB issuance. But domestically, the debt markets are looking buoyant, and there is significant interest in sectors like sustainable and renewable energy, which augurs well for Serentica," said the second person cited above. In September, Serentica raised 3,000 crore from REC and 2,600 crore from PFC.

“With the funding secured, we will be accelerating the development of our first phase of projects, which will bring clean energy to hard-to-abate energy-intensive industrial consumers and help them move towards a net-zero future." Pratik Agarwal, director of Serentica, said in a statement on 25 September.

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