Avaada in talks with Standard Chartered, SMBC & other banks to raise $700 mn for SJVN solar-wind hybrid project
Green energy company Avaada Group is in advanced talks with foreign banks, including Standard Chartered and Sumitomo Mitsui Banking Corp ( SMBC), to raise $700 million (Rs 6,500 cr) in a 20-year project finance deal to fund its solar-wind hybrid project awarded by the Sutlej Jal Vikas Nigam ( SJVN), three people familiar with the details told ET, on the condition of anonymity.
Terms of the loan are being finalised, including a likely put option at the end of five years, to allow a repayment window to the borrower, said the people cited above.
Japanese bank Mitsubishi UFJ Financial Group (MUFG) and Singapore’s DBS Bank are also among the lenders likely to participate in this loan deal, likely to be finalised early next month.
“This is a project being implemented by Avaada where the power will be sold to SJVN through a power purchase agreement (PPA). It’s a long gestation project because of which the loan is a longer tenure. The structure of the loan is still being worked out and will be finalised in the next few days,” said a person aware of the details.
MUFG, DBS and Standard Chartered declined to comment while SMBC and Avaada did not respond to ET’s emails seeking comment.
Last year, SJVN awarded Avaada contracts for large-scale solar-wind hybrid projects totalling 1410 MW in, which included an 820 MW hybrid project with a 25-year PPA and a 590 MW interstate transmission system connected renewable projects on build operate transfer basis also with a 25-year PPA.
In 2023, Avaada had won a 300 MW project from Solar Energy Corporation of India (SECI), financing for which had been finalised at the end of December. MUFG and SMBC along with a European bank had provided Rs 1150 crore each at 8.40% per annum for a five-year loan.
Earlier this month in a report on group subsidiary company Avaada Electro Ltd credit rating company ICRA said the group’s long-term revenue visibility from a healthy order book position, favourable demand outlook for domestic module and cell manufacturers and healthy capacity utilisation are credit strengths.
However, the company’s significant capacity expansion plans expose it to execution and stabilisation risks and also keep its capital structure leveraged because of the ongoing debt-funded capacity expansion.
“Given the large debt-funded capacity expansion plans at AEL (Avaada Energy Ltd), the company’s capital structure is expected to be leveraged with the debt to operating profit before depreciation interest tax and amortisation remaining high over the next two to three years.
“The extent of the leverage and the company’s ability to maintain adequate liquidity and service debt obligations in a timely manner will remain a key credit monitorable. A successful execution and stabilisation of the expanded capacity will be critical to support the cash flows and mitigate the risks associated with the elevated debt levels,” ICRA said.
Terms of the loan are being finalised, including a likely put option at the end of five years, to allow a repayment window to the borrower, said the people cited above.
Japanese bank Mitsubishi UFJ Financial Group (MUFG) and Singapore’s DBS Bank are also among the lenders likely to participate in this loan deal, likely to be finalised early next month.
“This is a project being implemented by Avaada where the power will be sold to SJVN through a power purchase agreement (PPA). It’s a long gestation project because of which the loan is a longer tenure. The structure of the loan is still being worked out and will be finalised in the next few days,” said a person aware of the details.
MUFG, DBS and Standard Chartered declined to comment while SMBC and Avaada did not respond to ET’s emails seeking comment.
Last year, SJVN awarded Avaada contracts for large-scale solar-wind hybrid projects totalling 1410 MW in, which included an 820 MW hybrid project with a 25-year PPA and a 590 MW interstate transmission system connected renewable projects on build operate transfer basis also with a 25-year PPA.
In 2023, Avaada had won a 300 MW project from Solar Energy Corporation of India (SECI), financing for which had been finalised at the end of December. MUFG and SMBC along with a European bank had provided Rs 1150 crore each at 8.40% per annum for a five-year loan.
Earlier this month in a report on group subsidiary company Avaada Electro Ltd credit rating company ICRA said the group’s long-term revenue visibility from a healthy order book position, favourable demand outlook for domestic module and cell manufacturers and healthy capacity utilisation are credit strengths.
However, the company’s significant capacity expansion plans expose it to execution and stabilisation risks and also keep its capital structure leveraged because of the ongoing debt-funded capacity expansion.
“Given the large debt-funded capacity expansion plans at AEL (Avaada Energy Ltd), the company’s capital structure is expected to be leveraged with the debt to operating profit before depreciation interest tax and amortisation remaining high over the next two to three years.
“The extent of the leverage and the company’s ability to maintain adequate liquidity and service debt obligations in a timely manner will remain a key credit monitorable. A successful execution and stabilisation of the expanded capacity will be critical to support the cash flows and mitigate the risks associated with the elevated debt levels,” ICRA said.
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