SBI Capital Markets redefined its supremacy over the Indian loan market in 2015, devising unique solutions for its clients and working closely with regulators to resolve some deep-rooted problems in project financing.
India’s largest domestic investment bank dominated the league table, arranging 44.6% of all the country’s syndicated loans during IFR’s review period. Also, it played a crucial role in helping Indian borrowers access financing at a time when many were reeling under slower economic growth.
SBI Caps successfully steered the biggest and most challenging refinancing loans during the review period. It took up the challenge of refinancing a Rs46.89bn (US$706m) local loan for HPCL Mittal Energy with US dollars, using foreign currency non-repatriable (FCNR) accounts of Indian banks to lower the borrower’s cost of funding, while working within strict Indian rules that do not allow rupee loans to be repaid with foreign-currency debt.
The out-of-the-box financing also came with flexible covenants to allow future expansion and continued volatility in crude oil prices, and gave the borrower an average maturity of nine years for a loan with door-to-door life of 13 years. Typically, FCNR deposits are held for only three to five years.
SBI Caps also showed its prowess with a Rs23.40bn financing for Meenakshi Energy in March. Delayed approvals and cost overruns had plagued the project in Andhra Pradesh and the stressed financing was heading for disaster in December 2013, when GDF Suez of France acquired a 74% stake.
The project became a test case for the Reserve Bank of India, which had stipulated that stressed borrowings be classified as non-performing loans after a change of ownership. The financing resolved the project’s difficulties and funded a second phase of construction, besides resulting in a change to the RBI’s guidelines.
SBI Caps showed its ability to solve financing challenges in other key transactions, including a Rs148.4bn loan for Adani Power Maharashtra in August, which was a landmark under the government’s 5/25 scheme, as well as a Rs179.21bn financing for ONGC Petro Additions in April.
It also arranged the largest private-sector acquisition financing in the power sector, with a Rs75.5bn 14.5-year loan for JSW Energy’s purchase of two hydropower projects from Jaiprakash Power Ventures.
On the offshore front, the bank helped Tangsibji Hydro Energy, a fully owned entity of the Royal Government of Bhutan, fund a power project in the Indian bank market for the first time. SBI Caps arranged Rs3.53bn 15-year loan for the project, which also had a 32-year co-funding portion from the Asian Development Bank.
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