International Finance Corporation plans to make a debt investment of $36 million (about Rs 260 crore) in Mahindra Renewables Pvt. Ltd to help the company develop a solar power project.
IFC may also separately help the wholly owned unit of Mahindra Susten Pvt. Ltd mobilise a syndicated loan of $93 million, the World Bank’s private-sector investment arm said in a disclosure.
Mahindra Renewables is developing a 250-megawatt solar project in Rajasthan’s Jodhpur district. The estimated project cost is around $171 million, IFC said.
The financial institution said the debt investment will result in a positive impact on the climate through the lowering of greenhouse gas emissions and increasing clean energy production in the country, which is also a stated policy objective of the Narendra Modi-led central government.
IFC will provide the loan with a long-term maturity of up to 20 years. The debt will be provided with a fixed interest rate to protect against volatility from fluctuations. “IFC’s participation will facilitate the involvement of other lenders to finance the project, especially in a market context where local lenders are facing sectoral headwinds,” it said in its disclosure.
Mahindra Susten – a portfolio company of Mahindra Partners, the private equity division of the Mahindra Group – provides services within the renewable energy segment such as site surveys and feasibility reports to unit maintenance. The company also provides advisory services pertaining to aspects such as financing, financial benefits, and regulatory approvals.
In June last year, Japanese conglomerate Mitsui & Co. Ltd said it would acquire a 49% stake in Marvel Solren Pvt. Ltd, a Mahindra Susten unit. The Mahindra Group arm continues to hold the remaining 51% in Marvel.
IFC’s India bets
The Washington-headquartered IFC, which actively invests in India through both equity and debt instruments, has conducted several deals in the country of late.
In July last year, it took part in business-to-business marketplace Bizongo’s Series C funding round, which saw the startup valued at nearly $100 million.
In the same month, the firm said it would provide $150 million (around Rs 1,028 crore) in the form of a five-year senior loan to private sector lender RBL Bank.
In May, it anchored a $222 million debt funding round in Cholamandalam Investment and Finance Company Ltd. In April, IFC said it planned to provide $125 million to L&T Finance Ltd to help the non-bank lender expand its farm equipment financing portfolio.