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Hero Future Energies to get USD 43.3 million debt financing from IFC

International Finance Corporation (IFC) plans to provide debt financing of up to $43.3 million in in Munjal family-promoted Hero Future Energies Global Ltd (HFE) for the construction of a solar power plant.

The Fund will be used to build a 250 MW project at Bhadla in Rajasthan, IFC a sister organisation of the World Bank said in a disclosure that the total estimated project cost is approximately $200 million, of which IFC will provide a debt-financing of $43.3 million along with mobilisation of senior loans on best effort basis.

Hero Future Energies’ step-down subsidiary Clean Solar Power (Jodhpur) Pvt. Ltd. has proposed the development, construction, operation and maintenance of a 250 MW solar farm.

The solar farm will sell power to state-run Solar Energy Corporation of India Ltd as per a 25-year power purchase agreement.

IFC will provide a fixed-interest rate local currency loan with long term maturity of up to 20 years which it said is not easily available in the market. “This will improve project viability against any adverse interest rate fluctuations. Longer tenor loans can help increase the overall competitiveness of the project,” it stated in the disclosure.

IFC also indicated that its involvement will facilitate the participation of other lenders to finance the project, especially in a market context where local lenders are facing sectoral headwinds.

This is the second time IFC is backing Hero Future Energies. In 2016, IFC and its Global Infrastructure Fund had each invested $62.5 million in the firm.

HFE has an installed capacity of more than 1.2 GW and is in the process of implementing approximately another 1 GW. The firm has presence in nearly 10 states with operating asset base across wind, solar PV (grid connected) and rooftop plants.

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IFC has backed several other Indian renewable energy companies. It made debt or equity investments in companies such as Tata Cleantech Pvt. Ltd, Azure Power Global Ltd, Actis-owned Solenergi Power Pvt. Ltd, Clean Max Enviro Energy Solutions Pvt Ltd and Mahindra Renewables Pvt. Ltd.

Apart from making debt investments, IFC has an active direct private equity-style investment practice in India. It also has an active limited partner, or LP, portfolio in India where it backs private equity and venture capital funds focused on India.