Government-owned Power Finance Corporation (PFC) has announced the closure of its largest-ever foreign currency term loan, raising $1.265 billion. The deal was facilitated through an agreement with multiple banks located in IFSC at GIFT City, Gandhinagar in Gujarat.

The funds from this loan will finance projects other than thermal power generation, underscoring PFC’s commitment to decarbonization and supporting the shift to green energy.

This multi-currency loan will allow PFC to expand its business, strengthen its market standing, diversify its funding sources, and maintain a competitive advantage.

The loan, with an average floating interest rate of 4.21% per annum, is denominated in USD, EUR, and JPY (the G3 currencies) and has a five-year term.

It is linked to external benchmark rates such as the Secured Overnight Financing Rate (SOFR) for USD, the Euro Interbank Offered Rate (EURIBOR) for EUR, and the Tokyo Overnight Average Rate (TONA) for JPY.

The transaction involved multiple banks, including SBI, IDBI, Axis, MUFG, Deutsche, and SMBC. SBI was the largest lender and acted as the facility agent for the deal.

The company recently reported a 20% increase in consolidated Profit After Tax, rising from ₹59.82 billion (~$712.6 million) in the first quarter (Q1) of the financial year  (FY) 2024 to ₹71.82 billion (~$855.4 million) in Q1 FY 2025.

The consolidated loan asset book crossed the ₹10 trillion (~$119 billion) mark, standing at ₹10.05 trillion (~$119.7 billion) as of June 30, 2024, compared to ₹8.87 trillion (~$105.6 billion) a year earlier.

Last November, PFC approved projects worth ₹1.17 trillion (~$14.04 billion) for various state distribution companies under the Revamped Distribution Sector Program as of September 2023. The public sector lender also approved loans worth ₹70 billion (~$8.4 billion) and disbursed ₹31 billion (~$3.7 billion) under the Late Payment surcharge program, fetching the DISCOMs more than a 50% reduction in legacy dues.

The company’s wholly-owned subsidiary, PFC Consulting, issued a tender to select a transmission service provider to establish an ISTS at Kurnool-III PS, Andhra Pradesh, to integrate an additional 4.5 GW of renewable energy.

Earlier, PFC invited bids to evacuate 3 GW of renewable energy from Gujarat.