REC Limited, a public infrastructure finance company, involved in financing power projects, has raised $1.175 billion (~₹82.45 billion) from a consortium of seven banks as the Mandated Lead Arrangers and Bookrunners.
According to the press release, it is the single largest syndicated loan raised in the international bank loan market by any Indian non-banking financial company (NBFC).
The deal benchmarked to the USD LIBOR was financed by seven Indian and international banks, including Axis Bank, Bank of Baroda, Bank of India, Canara Bank, DBS, Mitsubishi UFJ Financial Group (MUFG), and Sumitomo Mitsui Banking Corporation (SMBC).
REC plans to use the transaction proceeds to fund infrastructure power projects permitted under the Reserve Bank of India guidelines.
As per the press release, the deal will be soon launched in the Asian Loan Syndication market to garner interest from a wider investor community.
Sharing his views on the successful transaction, Sanjay Malhotra, Chairman and MD of REC, said, “This extra commercial borrowing (ECB) represents REC’s efforts in diversifying its sources of borrowings at competitive pricing while remaining attractive to the Indian and International lenders. We are pleased with the overwhelming response of Banks to this ECB, which is the largest ever offshore term loan facility for any Indian NBFC.”
The company provides financial assistance to state electricity boards, state governments, central and state power utilities, independent power producers, rural electric cooperatives, and private sector utilities.
Last month, REC entered into an agreement with Germany-based KfW Development Bank to avail official development assistance loan of $169.5 million (~₹12.51 billion). The agreement was signed under the Indo-German Bilateral Partnership after the Ministry of Finance’s approval.
Earlier, the company had raised a $75 million (~₹5.53 billion) five-year secured overnight financing rate (SOFR) linked syndicated term loan. Sumitomo Mitsui Banking Corporation, Singapore Branch, was appointed as the sole mandated lead arranger and bookrunner. It was the first SOFR-linked term loan for any NBFC in India. REC had also entered into an interest rate swap referencing SOFR to hedge the interest rate risk on the facility.
Also, last year, REC sought the approval of shareholders to raise ₹850 billion (~$11.63 billion) through the private placement of bonds or debentures.