Greenko Energy Holdings, the renewable energy company backed by Singapore's GIC and Abu Dhabi's ADIA, has successfully raised Rs 4,800 crore from the National Bank for Financing Infrastructure and Development (NaBFID). The funding comes as the company seeks to refinance its maturing dollar debt obligations through a structured loan arrangement.

Loan Structure and Asset Portfolio

The financing has been structured through long-term loans to 38 special purpose vehicles (SPVs) under a restricted group framework. This structure provides lenders with enhanced security by defining which subsidiaries will comply with loan covenants and guarantees.

The SPVs maintain long-term power purchase agreements with distribution companies and commercial and industrial customers, providing stable revenue streams. Under the restricted group structure, if any entity fails to meet payment obligations, other SPVs within the group can step in to service the debt, offering additional repayment comfort to lenders.

Debt Refinancing Strategy

The primary purpose of this funding is to redeem $940 million in green bonds issued by Greenko Dutch B.V, an overseas subsidiary, in March 2021. These bonds are scheduled for maturity this year, and the company is expected to complete the redemption as early as this week following the loan disbursement earlier this month.

The NaBFID loan will partially finance the bond redemption, with any additional requirements to be met through internal cash flows. This refinancing strategy allows Greenko to replace shorter-term dollar debt with longer-term rupee financing, potentially reducing currency risk and extending debt maturity profiles.

Company Profile and Recent Developments

Greenko operates with a net installed capacity of 11 GW across 20 states in India and has initiated integrated renewable energy storage projects in Andhra Pradesh, Madhya Pradesh and Karnataka. However, the company recently faced challenges that impacted its credit profile.

In the previous month, Fitch Ratings downgraded Greenko's long-term foreign-currency issuer rating to 'BB-' from 'BB'. The downgrade cited delays in the restoration of the Teesta III hydro project and the operational start of the 480MW capacity of its first pumped hydro storage project.

Strategic Backing and Governance

Despite operational challenges, Greenko benefits from substantial strategic support through its ownership structure. GIC holds a 58% stake in the company and maintains four out of 13 board seats, providing strategic oversight and financial backing.

GIC's involvement extends to approving investment plans, overseeing operations and managing risks. The shareholder has committed to inject equity funding for 25% of costs for capex and investment plans, including under-construction pumped storage projects, providing financial stability for the company's growth initiatives.