The debt financing for Orient Green Power’s Rs18.57 billion ($420 million) Beta Wind portfolio is the largest ever put before Indian lenders. It indicates large-scale financings for wind can be distributed widely, and provides a template for future deals of a similar size.

The project company, Beta Wind Farm, is a wholly-owned subsidiary of Orient Green Power. Shriram founded Orient as a vehicle to develop renewables projects, with a focus on wind, biomass and small hydro. Early-stage equity investors in Orient include Bessemer Venture Partners and Olympus Capital.

Orient benefits, however, from being able to turn to Shriram as turnkey engineering, procurement and con­struc­tion contractor on its projects. Given lenders’ fam­i­liarity with the Shriram name, Orient found it easier to present them with a portfolio of power projects than a pure developer or financial sponsor would.

The financing consisted of a Rs12.36 billion loan led by Axis Bank, which complements Rs6.21 billion in sponsor equity, half of which the sponsor is contributing upfront. Axis brought in commitments from Andhra Bank, Bank of India, Canara Bank, Dena Bank, Karnataka Bank, Tamilnad Mercantile Bank, UCO Bank, Union Bank of India, and United Bank of India.

This equity was funded from part of the proceeds of a Rs9 billion initial public offering in November 2010, under which shares equivalent to 40% of Orient were offered at Rs45.70 per share. The listing, at the lower end of its targeted range, disappointed, but left Orient with a useful war-chest for its development plans.

The Beta portfolio amounts to 300MW, using 1.5-1.65MW turbines, with an initial focus on Tamil Nadu. It is subdivided into four clusters at different locations. In November, Orient signed a turbine supply agreement with Vestas for 20 1.65MW V82 units, the first time Orient had worked with Vestas.

The plants benefit from India’s central generation-based incentive of Rs.0.50 per kWh and a preferential tariff enacted by the state of Tamil Nadu of Rs3.39 per kWh. The portfolio is set to sell 49% of its output to the Tamil Nadu Electricity Board under a long-term contract, and the remainder to large industrial users under the captive power regulations.

Orient has subsequently said that it wants to move some of the portfolio to other states, including Maharashtra and Gujarat, and that this might increase project costs, but this would also increase the diversification benefit to lenders.

Beta Wind Farm Pvt. Ltd
Status: Closed 14 October 2010
Size: Rs18.57 billion
Location: Initially Tamil Nadu, India
Description: 300MW wind portfolio
Sponsor: Orient Green Power
Equity: Rs6.21 billion
Debt: Rs12.36 billion
Lead arranger: Axis Bank
Technical consultants: 3 Tier, AWS Truewind, Bhide Associates
EPC contractor: Leitner Shriram Manufacturing Company
Lender legal: ALMT Legal