The six subsidiaries of Vector Green Energy – an independent power producer focused on renewable energy and backed by Global Infrastructure Partners (GIP) – will issue the first AAA-rated green bonds in the local market.
The subsidiaries plan to raise Rs 1,237 crore and have received Climate Bonds Standard certification for their bonds. The issue received the highest rating from CRISIL and India Ratings. The term of the bonds will be three years. Axis Bank and ICICI Bank are the guarantors of the operation.
The six subsidiaries of Vector that issue 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 percent is tied by 25-year power purchase agreements with the Solar Energy Corporation of India (SECI) Center and the National Thermal Power Corporation (NTPC).
Vector Green owns and operates 750 MWp of renewable assets in wind, large-scale and rooftop solar projects. They are spread across 19 ground project sites and nearly 200 rooftop project sites in 12 Indian states. Vector recently won a new 90 MWp solar asset in Gujarat. It is owned by funds managed by GIP, one of the world’s leading infrastructure fund managers with a portfolio of over $ 71 billion. It employs more than 62,000 people and has a combined annual turnover of $ 45 billion. So far Indian companies have gone overseas to issue green bonds, where there is a lot of cash to tap into.
The value of green bond issuance exceeded $ 6 billion this calendar year, while until 2020 cumulative green bond issuance was only $ 10 billion. Of that, there have only been a handful of green rupee bond issues.
Vector’s issuance is expected to significantly boost the green bond market in India and help attract international investors to Indian corporate bonds, said a person closely involved in the deal.
As Indian companies go overseas to raise funds, trying to bring these investors to Indian markets and invest in rupee resources has not been successful.
Arrangers say most foreign funds focus on environmental, social, and corporate governance (ESG) lending, and companies are engaging in sustainable projects. This is partly because India does not have an appropriate green standard. If a bond or fund is certified “green,” it cuts 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 due to the lack of green standards, bankers say.
The biggest green loan issue to date came from Adani Green, who raised $ 1.3 billion in March. The Adani Group plans to mop up $ 12 billion in green funds over the next four to five years, raising $ 2-3 billion annually, mostly in the overseas market.