According to reports from The Hindu BusinessLine and Global Banking & Finance Review, Aditya Birla Renewables is seeking $1.5 billion in rupee-denominated loans to fund the acquisition of Shell Plc's Indian renewable energy arm. The company had earlier secured a $1.6 billion bridge loan commitment from MUFG Bank to fund the acquisition, as reported by two bankers. The renewable-energy arm of Aditya Birla Group agreed in July to acquire Solenergi Power, a Shell Plc unit that includes the Sprng Energy group companies, for $1.8 billion. The company is now specifically aiming to avoid costlier bridge debt through this rupee loan structure.
As reported by three bankers to The Hindu BusinessLine and Global Banking & Finance Review, the Indian company is now looking to raise longer-term rupee-denominated loans at the project level to avoid the bridge facility. Bridge financing is usually intended as interim funding and comes at a higher cost, while longer-term project financing is backed by assets and reduces the cost of funding. The tenor of the loans is expected to be around 80 per cent of the project's lifecycle, according to one of the bankers cited in the report. This strategic approach allows ABRen to secure more favorable financing terms compared to the higher-cost bridge facility.
According to the bankers, the financing will likely be split across 17-20 special purpose vehicles holding individual projects, including some that are already operational and the balance under construction. As reported by The Hindu BusinessLine, ABRen has reached out to multiple Indian banks, including the State Bank of India and HDFC Bank, for the loans. The company has not yet made payment to Shell because the transaction is yet to close, giving it time to finalise the financing structure. The rupee loan structure provides ABRen with the flexibility to structure financing across multiple SPVs while maintaining currency stability.
A spokesperson for Aditya Birla Renewables did not respond to Reuters queries sent by email on Thursday, as reported by The Hindu BusinessLine. The bankers declined to be identified as they are not authorised to speak to the media. MUFG, SBI and HDFC Bank did not reply to requests for comment regarding the financing discussions. The company's strategic decision to pursue rupee loans over bridge financing demonstrates its commitment to securing cost-effective, long-term project financing for this significant acquisition.
