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Caparo raises more finance as wind farm build out continues

AIM listed Indian wind energy developer Caparo Energy has raised a second tranche of mezzanine financing of $33.5m to help fund its ambitious wind farm development programme in India.

The finance is being provided for a 4-year term by Indian lender Infrastructure Development Finance (IDFC), which provided a first tranche of $78.5m in June. Caparo says that as it said in June, the mezzanine financing does not entail any equity dilution for the company’s existing shareholders. “The Company expects to repurchase/buy-back both tranches of mezzanine from internal cash flows and the issue of senior debt instruments, bonds or other debt refinancing, within three to five years,” Caparo says.

Caparo says that the $112m total of mezzanine finance, along with existing resources, will enable it to develop around 700MW of wind projects. Some analysts have questioned Caparo’s ability to fund its ambitious expansion plans, but the company it is moving forward ahead of schedule, reporting that since June it has placed specific orders with wind turbine Suzlon for a further 260MW for five projects located in the states of Maharashtra, Gujarat, Karnataka and Rajasthan. This brings the total to 360MW in specific orders under its 1GW contract with Suzlon. Caparo’s first 52MW wind farm in Mokal in Rajasthan was commissioned in mid July and is selling power under a 20 year power purchase agreement with the Rajasthan State Electricity Board, while the second and third wind farms, will be completed by the end of the year.

“The Board is confident that these projects represent some of the best sites being commissioned in India over the next two years and that load factors for these sites are very attractive,” says Caparo. “By March 2012 the Company will have a total of 500 MW of fully operational projects connected to the grid and generating cash flow.”

The full 1GW of capacity it has ordered from Suzlon will be installed by March 2013, making it one of India’s biggest wind power operators.

Meanwhile Caparo Energy is making a series of management changes and planning to change its name to Mytrah Energy at an extraordinary shareholders meeting on 5 September. R Ramakrishnan has been appointed president of Caparo Energy. He was previously managing director at Indian infrastructure group GMR Industries for four years before becoming Group Corporate Head of its Renewable Energy business. Angad Paul, who is Chairman of Caparo Group, is stepping down from his current role as Non-Executive Chairman of the Company and will continue as a Non-Executive Director. Chief Executive Ravi Kailas has been appointed chairman in addition to his current role.

The name change seems designed to help create an independent identity for the company from Caparo Group. Chief executive Ravid Kailas says “As the Company’s transformative growth continues, its identity has also evolved. The Board would like to re-iterate its gratitude to have begun as Caparo Energy and would like to thank the Caparo Group for their on-going support to the Company.”

Caparo still owns a major stake in Caparo Energy through Angad Paul family discretionary trust, which is a beneficiary shareholder of Ersano Overseas which holds 14.7% of the shares.

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