IFC provides US$103 M financing for solar projects in India

 IFC, a member of the World Bank Group, has invested INR 6.67 billion (US$103 million) in L&T Infrastructure Finance Company Ltd. by subscribing to the first official Green Bonds in India.

This is in line with IFC’s strategy to support renewable energy infrastructure in the country and also develop the capital markets. 

L&T Infrastructure Finance Company Limited, a wholly-owned subsidiary of L&T Finance Holdings Ltd., will use this money to give loans to solar power projects. The Company has been increasing its focus on renewable energy, which has come to comprise 37 percent of its total portfolio of US$3.51 billion. 

On May 30 this year, the Securities and Exchange Board of India (SEBI) came out with norms governing Green Bonds. Those bonds would qualify as ‘Green’ whose proceeds are used for projects or assets of renewable energy, clean transport, sustainable water or land management, climate change adaptation, and energy efficiency. 

Virender Pankaj, Chief Executive, L&T Infrastructure Finance, said: 

“We are delighted to partner with IFC that has been a pioneer in the Indian and global green bond market and climate financing. This partnership with IFC will further diversify our funding profile and demonstrates the strength of our project appraisal and risk assessment capabilities for renewable energy lending.” 

Jun Zhang, Country Head for IFC in India, commented:

“L&T Infrastructure Finance is a leading financier to the renewable energy sector and this green bond subscription will serve as a catalyst for corporates to issue green bonds and provide the impetus for financiers to stay invested for a longer-term, which is essential for long-gestation, capital intensive infrastructure projects.”

IFC has, with the Tata Group, created the first private sector “Green Investment Bank” in India - Tata Cleantech Capital Limited -- and given $170 million in wholesale investments to financial intermediaries that support the climate change program in the country. In addition, IFC has invested about US$1.2 billion in climate-friendly projects through direct investments in India, in the last five years. 

IFC’s contribution to India’s renewable energy sector accounts for 15 percent of the incremental capacity since 2010. It invests in financial institutions that fund climate change projects as well as directly in projects and companies.