Vector Green’s subsidiaries to raise Rs 1,237 crore in green bonds

The 6 subsidiaries of Vector that are issuing the bonds are Malwa Solar Power Generation, Sepset Constructions, Rattanindia Solar, Yarrow Infra, Citra Real Estate, and Priapus Infra

Topics

Green bonds | renewable energy


Anup Roy  | 
Mumbai 

The six subsidiaries of Vector Green Energy — a renewable energy-focused independent power producer backed by Global Infrastructure Partners (GIP) — will be issuing the first AAA-rated green bonds in the local market.

The subsidiaries plan to raise Rs 1,237 crore, and received Climate Bonds Standard certification for their bonds. The issuance has been given the highest rating by CRISIL and India Ratings. The tenure of the bonds will be three years. Axis Bank and ICICI Bank are the underwriters of the deal.

The six subsidiaries of Vector that are issuing bonds are Malwa Solar Power Generation, Sepset Constructions, Rattanindia Solar, Yarrow Infrastructure, Citra Real Estate, and Priapus Infrastructure. They operate 352 MWp (megawatt peak) of solar power projects across the country in Rajasthan, Maharashtra, Karnataka, Uttar Pradesh and Madhya Pradesh.

Of the capacity, 98 per cent is tied up through 25-year power purchase agreements with the Centre’s Solar Energy Corporation of India (SECI) and the National Thermal Power Corporation (NTPC).

Vector Green owns and operates 750 MWp of renewable assets across wind, utility scale and rooftop solar projects. They are spread across 19 ground mount project sites and nearly 200 rooftop project sites across 12 states in India. Vector has recently won a 90 MWp greenfield solar asset in Gujarat. It is owned by funds managed by GIP, one of the leading global infrastructure fund managers handling a portfolio of over $71 billion. It employs over 62,000 people and has combined annual revenues of $45 billion. So far, Indian companies have gone overseas to issue green bonds, where there is plenty of liquidity to tap.

The value of green bond issuance has crossed $6 billion this calendar year, whereas, till 2020, the cumulative green bond issuance was just $10 billion. Out of this, there has been only a handful of rupee issuances of green bonds.

Vector’s issuance is expected to boost the green bond market in India substantially, and help bring international investors in Indian corporate bonds, said a person closely involved with the deal.

While Indian companies are hitting offshore to raise funds, trying to bring those investors to the Indian markets and investing in rupee resources have not seen success.

Deal arrangers say most of the foreign funds are focusing on environmental, social, and corporate governance (ESG) lending, and companies are committing themselves to sus­ta­inable projects. This is partly because India doesn’t have a proper green standard. If a bond or fund is certified “green”, it brings down the cost by almost half a percentage point.

However, in the domestic market, investors do not yet distinguish much between a normal bond and a green bond because of the lack of green standards, say bankers.

The largest green loan issuance so far has come from Adani Green, which raised $1.3 billion in March. The Adani Group is planning to mop up $12 billion in green funds in the next four-five years, by raising $2-3 billion annually, mostly from the overseas market.

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