ReNew Power, an Indian clean energy company majority owned by Goldman Sachs, raised $475 million from its maiden US dollar-denominated bond on Tuesday in a complex deal designed to circumvent central bank restrictions on speculative-grade offshore issuance.
Using special purpose vehicle Neerg Energy, which will invest the funds in ReNew Power's upcoming offshore rupee -- or masala -- debt issue, the green dollar bond was structured to meet Reserve Bank of India guidelines.
Indian corporates are not allowed to finance onshore rupee-denominated debt with offshore dollar debt and three to five-year offshore dollar bonds must have an all-in cost of no more than 300 basis points over six-month Libor. For maturities of 10 years and above, the all-in cost cap is Libor plus 500bp.
"The structure of the transaction did require some work," a syndicate banker running the deal told FinanceAsia after pricing. "It was one of the most documented transactions to get investors comfortable."
The decision to structure a relatively complex deal was in response to huge demand from dollar-based investors over offshore rupee investors, bankers said.
"It [made] more sense to do a dollar deal, especially for a first-time issuer," a source close to the deal said.
According to the offering document, Goldman Sachs, Abu Dhabi Investment Authority, Asian Development Bank, and Global Environment Fund collectively invested $650 million in the company between September 2011 and August 2016. Goldman Sachs is currently ReNew Power's single largest shareholder with a 60% stake.
Greeko comparison
With a similar foreign ownership structure, the closest comparable to ReNew Power's new dollar bond is Greeko's $500 million 4.875% August 2023 note, which yielded 5.58% prior to the deal's launch on Monday, according to syndicate bankers.
Singapore sovereign wealth fund GIC owns a 72.58% stake in Greeko, another renewable energy company in India. The Abu Dhabi Investment Authority owns a further 15.31%.
One of the syndicate bankers said fair value for ReNew Power was around the 6% area, after the bond traded slightly above par at 100.25. "Investors clearly felt 6% was the right pricing," the banker told FinanceAsia. "There was value in the transaction."
The final order book reached $1.2 billion from 109 accounts. By region, investors in Asia took 65% of the deal, EMEA and US bought 15% and 20%, respectively. By investor type, fund managers were allocated 94%, banks and private banks 5%. The remaining 1% went into insurers and pension funds.
The joint bookrunners of the ReNew deal were Goldman Sachs, HSBC, JP Morgan, Bank of America Merrill Lynch, and UBS, while Kotak Mahindra Bank was a co-manager.
