Rural Electrification Corporation to raise $1 bn via ECB this fiscal

Rural Electrification Corporation (REC), the state-owned power sector lender, is planning to raise $1 billion (about Rs 4,718 crore) through external commercial borrowings (ECB) in the current financial year.

The company expects to raise $400 million (Rs1,887 crore) by the second week of August.

The fundraising target through ECB route has gone up from the previous $400 million as the company is looking to finance some solar and wind power projects.

Till date, the company has financed only one solar power project in Gujarat.

“We are looking to raise the first tranche of money by the second week of August. The mandate for fundraising has been given to Tokyo-Mitsubishi and SBI,” JM Pathak, chairman & managing director, REC, said.

The company expects to raise the five-year loan at 6-month Libor plus 175 basis points.

“We are targeting some of the big-ticket power projects being set up by the private players. Companies like Lanco, Reliance and Nagarjuna could be our customers as they are coming up with some big power projects,” Pathak said.

The company is also planning to raise about Rs3,000 crore through infra bonds. The bonds would be issued in two tranches of about Rs1,500 crore each in October and February.

The company reported a 24% increase in its net profit for the first quarter of fiscal 2011 at Rs587 crore as against Rs471 crore for the corresponding period last year.