IFC to Loan $50 Million to Mahindra Renewables

The International Finance Corporation (IFC), a member of the World Bank Group, will provide $50 million (~₹3.2 billion) as senior or IFC-A loan to Mahindra Renewables Private Ltd. (MRPL).

MRPL, a Mahindra Group company, will use the loan to develop a 250 MW grid-connected solar photovoltaic (PV) project in Madhya Pradesh’s Rewa Ultra Mega Solar Park.

The government of Madhya Pradesh has appointed IFC as the lead transaction advisor to enable and facilitate the entire private investment for the Rewa Solar Project. The IFC would also help in designing a transparent auction process which would assist in the selection of private entities for the development of the projects.

Apart from loaning the $50 million (~₹3.2 billion), the IFC will also assist in mobilization of the syndicated parallel loan of up to $100 million (~₹6.4 billion). Proceeds from the IFC investment will be used by MRPL for the development, financing, construction, operation, and maintenance of the grid-connected solar PV project.

This is a welcome development for MRPL as the IFC will provide long tenor, fixed rate, local currency financing with a debt repayment profile that would match the cash flow of the projects and the long-life nature of the assets being financed.

In August 2017, the IFC revealed plans to issue up to $50 million (~₹3.2 billion) through non-convertible debentures (NCD) and mobilize up to $100 million (~₹6.4 billion) from other lenders for Arinsun Clean Energy, a subsidiary of Solenergi Power Private Ltd. (SPPL), to develop 250 MW of solar project in Rewa.

The IFC also will provide a $50 million (~₹3.2 billion) loan to ACME Jaipur Solar Power Private Limited, a wholly-owned subsidiary of ACME Solar, to develop a 250 MW solar project in the Rewa Solar Park in Madhya Pradesh.

In all, the IFC has promised mobilization of $550 million (~₹35.5 billion) in private investment for the 750 MW Rewa Ultra Mega Solar Park project.

In October 2017, Mercom reported that the Rewa solar park auction heralded the dawn of falling solar tariffs in India with a low levelized bid of ₹3.30 (~$0.051)/kWh. There are two major reasons for such low tariffs being quoted in the auction – the availability of cheap funds and the availability of payment security mechanisms to protect developer’s interests.

Image credit: Mahindra Susten