Hero Future Energies First USD Green Bond Fetches $3 Billion Orders

Hero Future Energies (HFE), the renewable energy arm of the Hero group, received orders worth $3 billion in its first green bond issuance in the overseas markets.

The company, through its subsidiary Clean Renewable Power (Mauritius), received the orders and priced at a coupon rate of 4.25 per cent for a six-year maturity period. The issuance was oversubscribed more than 8.5 times, HFE said.

Business Standard reported earlier this week that HFE will hit the international bond market for raising funds. The renewable company will use its Mauritius-based SPV to issue USD senior notes. It will use the proceeds of the proposed notes to subscribe to Indian rupee-denominated external commercial borrowing (INR ECB) bonds.

Ben Fraser, Chief Financial Officer, HFE said the company’s debut green bond offering witnessed participation from key global blue-chip investors. “The bond was launched to the market at an initial price guidance of 4.75 per cent. Given the strong demand from global accounts, price guidance was tightened by 50 bps. Even with the largest tightening from any Indian credit this year, most investors continued to remain in our books, resulting in a final order book of over USD 3 billion,” Fraser said.

He said 58 per cent of total allocation is to Asian investors, 15 per cent to Europe, the Middle East and African investors and 27 per cent to investors in the US.

HFE’s USD green bond comes after the company's first climate bond by any Indian renewable company in 2016.

Commenting on the Bond issuance, Rahul Munjal, Chairman & Managing Director, HFE said, “We have created a landmark by achieving the highest levels of oversubscription for any transaction out of India this year in the USD bond market. This is a very encouraging move by global investors especially in the post pandemic phase and demonstrates the importance of ESG among the investor community. This bond offering has opened up the global debt capital markets for HFE,” he said.

HFE plans to issue fresh equity of about $250 million to fund its renewable energy projects outside India, this paper reported recently. The company is in talks with leading global institutional financers to raise capital and aims to be a $1 billion company.

In December 2019, it raised $65 million from the Asian Infrastructure Investment Bank for this project. In November, Abu Dhabi Future Energy Company (Masdar) invested $150 million in HFE. This was followed by another round of strategic investment by the International Finance Corporation (IFC), which pumped in $90 million in HFE. IFC had earlier invested $125 million in HFE back in 2017.

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