Details of the Transaction (Including unique traits, if any)

The transaction involved arrangement of co-financing for debt (for the company’s 118 MW run of the river Hydro Power Project in Bhutan) on project finance basis, bringing together commercial and concessional lenders on a common platform.
The security structure was unique where Asian Development Bank (ADB- concessional financer) had recourse to Bhutan’s sovereign guarantee. Indian lenders had recourse only to project assets.

SBICAPS role

Appraised the project and syndicated  the required rupee debt of Rs. 353 Cr – collectively from State Bank of India (Rs. 250 Cr) and Export Import Bank of India (Rs. 103 Cr)  [Total project cost: Rs. 1189 Cr, total debt: Rs. 773 Cr].

Key Learnings

1. First hydro power project in Bhutan being funded by Indian banks on a project finance basis at commercial terms in collaboration with ADB (public sector) at concessional terms.
2. Unique structure enabled many learnings such as co-financing structure was evolved between Indian Commercial Banks and ADB, development of an alternative hedging mechanism, co-trusteeship with Bhutan security trustee, etc. Also, the structure served as a yardstick for upcoming projects to access finance on commercial terms and provide a boost to the hydropower sector in Bhutan.