India’s fifth largest private sector bank YES Bank plans to list a Green Bond of up to US$500 million on The London Stock Exchange by December this year.
As part of an overall plan to raise US$1 billion in equity, YES Bank is also considering raising further capital in London, possibly by listing Global Depository Receipts (GDR).
YES Bank formalised a memorandum of understanding (MoU), which it signed with The London Stock Exchange during the UK visit of Indian prime minister Narendra Modi last November, in order to develop bond and equity issuance for use in green infrastructure finance.
Rana Kapoor, managing director and chief executive of YES Bank, said: “YES Bank will strive to improve the access to long-term overseas funds for corporations in India, through capital markets in the UK particularly towards green infrastructure financing, which is high on India’s agenda. We also look forward to working with LSE in establishing London as the leading instrument for raising rupee denominated offshore capital via ‘Masala bonds’.”
'Masala bonds' are Indian rupee denominated bonds issued in offshore capital markets.
India plans to reach 175GW of renewable energy by 2022 (100GW solar), which will require significant investment.
A YES Bank statement said: “At the moment, sector limits, high street interest rates and asset-liability mismatch are the main challenges faced by the existing financing mechanisms.”
Consequently, it also claimed there is a need for innovative financing mechanisms to finance renewable energy projects in India.
YES Bank was the first issuer of the green infrastructure bonds in India. The bank has also committed to funding 5GW of renewable energy.
Last August, YES Bank also raised INR3.19 billion (US$49.4 million) from the issue of Green Infrastructure Bonds to International Finance Corporation (IFC) Washington to fund renewable energy projects including solar and wind power.
A detailed analysis of some of the financing issues facing developers looking to enter the Indian solar market can be found in the latest edition of PV Tech Power.