International Finance Corp (IFC), a member of the World Bank Group, on Thursday said it has bought green bonds worth Rs667 crore ($103 million) sold by L&T Infrastructure Finance Co. Ltd, a subsidiary of L&T Finance Holdings Ltd.
L&T Finance Holdings, part of the Larsen & Toubro group, offers financial products and services across rural, housing and wholesale finance sectors.
This is the first such sale after the Securities and Exchange Board of India (Sebi) on 30 May notified rules for issuing green bonds, the statement said.
Bonds, the proceeds of which will be used for projects in renewable energy, clean transport, climate change adaptation, energy efficiency, and sustainable water and land management, qualify as green bonds.
The funds will be used by L&T Infrastructure Finance to provide loans to solar power projects. Renewable energy comprises 37% of the company’s total loan portfolio of Rs22,774 crore ($3.51 billion).
“This partnership with IFC will further diversify our funding profile and demonstrate the strength of our project appraisal and risk assessment capabilities for renewable energy lending,” said Virender Pankaj, chief executive, L&T Infrastructure Finance.
In the last five years, IFC has invested about $1.2 billion in climate-friendly projects through direct investments in India. This includes its investments in green debt instruments of $50 million issued by Yes Bank Ltd and $75 million in PNB Housing Finance, a housing finance company promoted by Punjab National Bank. IFC, along with the Tata Group, has created Tata Cleantech Capital Ltd, an infra finance company, in India. Tata Cleantech Capital Ltd has given $170 million in wholesale investments to financial intermediaries that supports the climate change program in the country.
“L&T Infrastructure Finance is a leading financier to the renewable sector and this green bond subscription will serve as a catalyst for corporates to issue green bonds and provide the impetus for financiers to stay invested for a longer-term, which is essential for long-gestation and capital intensive infrastructure projects,” said Jun Zhang, India head for IFC.
The funds will be used by L&T Infra Finance to give loans to solar projects.