Aditya Birla Renewables is seeking $1.5 billion in rupee-denominated loans to fund its $1.8 billion acquisition of Shell’s Indian renewable energy business, aiming to avoid costlier bridge financing, Reuters reported, citing sources familiar with the discussions.
The renewable energy arm of the Aditya Birla Group had earlier secured a $1.6 billion bridge loan commitment from MUFG Bank to finance the acquisition of Solenergi Power, a Shell unit that includes the Sprng Energy group companies.
The two companies agreed to the deal in July.
Aditya Birla Renewables is now exploring longer-term, project-level financing, backed by assets and generally costing less than bridge loans. The proposed loans are expected to have a tenor equivalent to about 80 per cent of the projects’ lifecycles, a source said.
The financing is likely to be split across 17-20 special purpose vehicles holding individual projects, including operational assets and projects under construction, the report added.
Bridge loans are short-term borrowings used to meet immediate funding needs and typically carry higher borrowing costs, while longer-term project financing is backed by assets and reduces the cost of funding. Rupee-denominated loans are borrowed and repaid in Indian currency, which can help reduce foreign exchange risk compared with dollar-denominated borrowing.
Banks approached for project financing
Aditya Birla Renewables has approached several Indian lenders, including State Bank of India and HDFC Bank, for the proposed loans, according to the report.
The company is not immediately required to pay Shell because the transaction has yet to close, giving it time to finalise the financing structure.
Aditya Birla Renewables is yet to comment on the matter. MUFG Bank, SBI and HDFC Bank also did not respond to requests for comment.
The sources declined to be identified, saying they were not authorised to speak to the media.
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