REC To Raise $300-$500 Million In Yen-Denominated Green Bonds, Q2 Profit Up 38%

REC Ltd. plans to raise $300 million to $500 million in yen-denominated green bonds to fund its green loan portfolio.

The company is looking at the Japanese market as interest rates are lower as compared with U.S. dollar-denominated loans. Although scale is an issue with Japanese yen-denominated loans, the company is confident of raising at least $500 million before December, according to senior REC officials.

The company expects the deal roadshows to commence in the second half of November, and the issuance will happen after that, depending on the response, Vivek Kumar Dewangan, chairman and managing director at REC, told BQ Prime in an interview.

"The response in the non-deal road show was extremely good, and we expect that to be even better in the deal road shows that will happen in Tokyo, Hong Kong and London," Dewangan said.

"We expect the coupon rate to be in the range of 6% compared to the company's overall borrowing cost of 7.23%."

REC Q2 FY24 Highlights (Standalone, YoY)

The standalone net profit of REC rose 38% to Rs 3,773 crore on the back of strong net interest income.

Interest income on loan assets rose 18% to Rs 11,213 crore vs. Rs 9,534 crore, while disbursements during the quarter were up 133%.

Increase AUM To Rs 10 Lakh Crore By 2028

The company's asset under management has grown 20% YoY in Q2 FY24 to Rs 4,75,000 crore. "We planned to increase the AUM to Rs 10 lakh crore by 2030, but given the asset quality and demand from across the sectors, we expect to achieve that target by 2028," Dewangan said.

Increase Renewable Loan Portfolio To 30% By 2030

The company has also diverted its focus towards financing renewable segments, especially green hydrogen projects, electric vehicles, charging infrastructure and pumped hydro storage, among others, in line with the government's green energy target of net zero emissions by 2070.

"We want to increase the overall green loan portfolio to 30% by 2030 from 7% at present," Dewagan said. The government's plan to add 500 GW of renewable power capacity by 2030 will require around Rs 20 lakh crore in debt financing, and of that, they want to corner Rs 3 lakh crore for REC, he said.