REC Limited, a public infrastructure finance company, has raised $1.25 billion in August and September 2023 from a consortium of six banks and through a Foreign Currency Term Loan Agreement.

The company raised $1.15 billion in two tranches from a consortium of six banks. The financing proceeds are expected to go towards funding power, infrastructure, and logistics sector projects as permitted under the External Commercial Borrowings guidelines of the Reserve Bank of India.

The participating banks raised the loans as Mandated Lead Arrangers and Bookrunners.

Tranche 1 of the financing comprised $505 million raised on August 3, 2023, from Bank of Baroda, Gujarat International Fin Tec-City International Financial Services Centre Banking Unit (GIFT City IBU), Axis Bank, and State Bank of India’s London Branch.

Tranche 2 comprised $645 million raised on August 31, 2023, from State Bank of India’s London Branch, Bank of India’s London Branch, GIFT City IBU, and HSBC.

The tranches together involved an aggregate commitment of $550 million from GIFT City IBUs, which the company claimed to be the highest-ever commitment from GIFT City IBUs in a single month. GIFT City IBUs had previously committed $345 million back in December 2021.

The company also announced that it has signed a $100 million Foreign Currency Term Loan Agreement with the Export Import Bank of India (Exim Bank).

The proceeds of this loan will be used towards refinance for on-lending to the company’s borrowers in the power infrastructure and logistics sector for importing capital equipment.

Vivek Kumar Dewangan, Chairman and Managing Director, REC Limited, said, “REC has been actively looking for various innovative options to diversify its sources of borrowings to lower its cost of borrowings. We are pleased with the overwhelming response of Banks to these loans, which is also our largest single-month fundraising from GIFT City IBUs. We are delighted to partner with Exim Bank of India to bridge the financing needs of the power, infrastructure, and logistics sector and sign the loan agreement for $100 Million, which is the first one amongst us.”

The loans come with a five-year tenor and are benchmarked to Secured Overnight Financing Rate, a benchmark rate for loans denominated in U.S. dollars.

The funds were raised under REC’s Market Borrowing Program for 2023-24, worth ₹1.2 trillion (~$14.43 billion).

The government-owned power sector lender recently posted its highest-ever profit in the first quarter of any financial year. The company’s net profit during the first quarter of the financial year 2024 was ₹29.61 billion (~$356.16 million), a 21% year-over-year jump from ₹24.47 billion (~$294.34 million).

In May this year, REC listed its recently issued green bonds, which raised $750 million under its global medium-term program of $7 billion, at the GIFT IFSC Stock Exchanges in Gandhinagar.