International Finance Corporation (IFC), the private sector investment arm of the World Bank, plans to provide debt finance to Tata Capital Ltd's non-banking finance company (NBFC) unit and its existing portfolio firm Azure Power India Pvt Ltd, as per a preliminary disclosure note.
It has proposed to invest $40 million (around Rs 260 crore) in Tata Capital Financial Services Ltd (TCFSL) through secured non-convertible debentures (NCDs) in one or more tranches. The NCDs will have a five-year bullet payment tenure.
The funds from IFC will be channelled to farmers in rural areas for financing tractors and other agricultural equipment.
"IFC's investment would allow TCFSL to meet its funding requirements from a diversified source and assist in reducing bank borrowings," said the World Bank's investment arm.
TCFSL is amongst the top 10 private sector NBFCs offering fund and fee-based financial services to its customers, under the Tata Capital brand. It provides services in the field of commercial finance, infrastructure finance, wealth management, consumer loans besides distribution and marketing of Tata Cards.
Meanwhile, IFC has also committed debt to PE-backed Azure Power India Pvt Ltd, which is developing a 130 MW solar power plant in Karnataka through three wholly owned subsidiaries Azure Power (Raj.) Pvt Ltd, Azure Sunrise Pvt Ltd and Azure Photovoltaic Pvt Ltd.
IFC proposes to provide ‘A’ loan of up to $31 million, and syndication of parallel loans of up to $80 million equivalent to Azure Power. The project cost is estimated at about $147 million.
The project is expected to be commissioned by June 30, 2016. The off-takers will be the three state distribution companies namely Hubli Electricity Supply Company (HESCOM), Chamundeshwari Electricity Supply Company (CESCOM) and Gulbarga Electricity Supply Company (GESCOM).
Azure Power is an existing growth equity portfolio firm of IFC which invested in the firm way back in 2010. IFC has provided debt funding to the firm and its subsidiaries more than once thereafter. It had lent to the firm in 2012 and early this year completed a proposed debt funding of around $14 million that was disclosed in August 2014.
Founded by Inderpreet Wadhwa, Azure is an independent power producer which builds, owns and operates solar power plants in India. Other key investors in Azure include Helion Venture Partners and Foundation Capital.
IFC has been actively investing in the renewable energy space in India by way of direct financing, both as debt and equity. Its portfolio companies have set up over 2 GWh of renewable energy projects in the country.