Adani Green Raises $200 Mn Through Yen-Denominated Refinancing Deal

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Adani Green Energy Ltd (AGEL) has raised a Japanese yen-denominated loan to refinance its current debt for 350 MW of solar projects in the Indian state of Andhra Pradesh. This was done through its subsidiary Adani Solar Energy AP Six. The facility consists of an amortizing project loan for JPY 27,954 million ($200 million), with a debt maturity period of 16 years, a door-to-door tenor of 10 years, and an average tenor of more than 8 years.

Strong ties between AGEL and its two main relationship banks, MUFG Bank, Ltd., and Sumitomo Mitsui Banking Corporation, with equal participation, support the project financing facility.

The facility is connected to the Tokyo Overnight Average Rate (TONA), a Japanese benchmark rate indicator that has been around zero for some time, and emphasises the appeal of extending the use of alternative funding sources that offer relatively low-interest rates. The business is dedicated to having access to long-term capital without using up its growth capital, and it will keep looking at a variety of different financial sources to find a long-term funding solution to drive India’s energy transition.

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The refinancing arrangement is in line with AGEL’s objective of obtaining long-term financing and creating a debt structure that is in line with the life of the underlying assets for its operational assets. The facility complies with the standards for investment-grade credit metrics, which have a life-cycle leverage profile (measured by Debt to EBITDA) of approximately 3x covering the underlying PPA tenor.

Phuntsok Wangyal, CFO of AGEL, said, “This is an outstanding achievement for AGEL, demonstrating our capacity to acquire bank loans at competitive terms in sync with the underlying asset development plan to provide a long-term solution. The facility shows AGEL’s proactive and ongoing strategy to accessing liquidity in the face of a difficult interest rate environment in the larger markets, offering a long-term fix. This gives AGEL’s high-grade renewable asset portfolio great flexibility and a competitively priced funding solution thanks to the lower benchmark rate, reduced margin, and record low swap rates.”

As primary lenders for the Facility, MUFG Bank, Ltd., and Sumitomo Mitsui Banking Corporation were involved. Legal counsel for the transaction was provided by Cyril Amarchand Mangaldas and Latham & Watkins LLP.

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Recently, Adani Green Energy announced its Q2 FY23 results. Operational capacity has grown to 6724 MW during the quarter. Revenues from power supply jumped 33% over the corresponding quarter in Fy22, going to Rs 1107 crores in Q2 FY23. Cash profits rose 50% from Rs 401 crore to Rs 601 crores during the quarter.