Reliance Industries have raised $736 million through a green lending facility to fund Mukesh Ambani’s acquisition of Norwegian solar panel producer REC Solar Holdings, in what could be the first such M&A financing from an Indian company. The Australian and New Zealand Banking Group, DBS Bank, Credit Agricole, HSBC, and MUFG were among the bankers who contributed to this unique facility, which is being used for the first time for acquisition financing.
The debt facility will have a 120bps–125bps interest margin over LIBOR. The loan was taken out by REC Solar, a Singapore-based company that is backed by Reliance New Energy Solar, a wholly-owned subsidiary of Reliance Industries. A $250 million six-year term loan and a $150 million working capital facility are included in the loan, as well as a $460 million five-year bank guarantee facility.
Until the report’s release, a mail forwarded to Reliance Industries went unanswered. Individual banks could not be reached for comment at the time of this writing. Reliance announced a binding deal with REC Solar’s owners, China National Bluestar (Group) Co Ltd, on October 10 to purchase the Norwegian solar manufacturing company for $771 million. Reliance recently announced the purchase of a 40% share in Sterling and Wilson Solar, all of which are part of the SP Group.
Mukesh Ambani informed Reliance shareholders earlier this year that the Reliance aspires to be carbon-neutral by 2035 and has big plans in the alternate energy sector. The leveraged acquisition is becoming more popular in India, as private equity investors increasingly use the target entity’s balance sheet to fund acquisitions. Blackstone and its co-investors, including the Abu Dhabi Investment Authority, GIC, and the University of California Investments, raised $1.1 billion in July to fund their $2.9 billion purchase of Mphasis.
According to data published by Refinitiv, mergers and acquisitions involving Indian companies reached a three-year high in the first nine months of 2021. According to the data, transactions totaling $90.4 billion were disclosed between January and September this year, up 35.1 percent from the same period last year.
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