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Adani Electricity Mumbai, a subsidiary of Adani Transmission, is the first in India’s energy sector to issue sustainability-linked bonds.

Adani Transmission Limited’s (ATL) distribution arm, Adani Electricity Mumbai Limited (AEML), has announced the launch of a USD 2 billion Global Medium-Term Notes programme (GMTN).

The next phase in AEML’s Capital Management Plan is the GMTN programme and Sustainability, Linked Bonds. On Friday, AEML completed the program’s first takedown of USD 300 million.

The takedown order book was 9.2x oversubscribed by high-quality real money worldwide investors, with Asia accounting for 49 per cent of the total, EMEA for 27 per cent, and North America for 24 per cent.

AEML, one of India’s largest integrated utilities, servicing over 12 million consumers in Mumbai, priced its first takedown of USD 300 million through 10-year notes under the 144A / REG S format. With this landmark transaction, AEML’s capital management plan enters the second phase, with 100% of the term debt being placed in the international capital markets. The overall maturity now increased to ~9 years.

This transaction marks several firsts for India, including the tightest coupon ever by a BBB- rated utility issuer in Asia (ex-Japan),  the largest order-book oversubscription ever for a 10-year ESG bond issuance in Asia (ex-Japan),  the first Sustainability Linked Bond (SLB) issuance from an Indian utility.

The Key Performance Indicators chosen for the SLB framework contribute to UN Sustainable Development Goals SDG 7 (Affordable Clean Energy), SDG 11 (Sustainable Cities and Communities), and SDG 13 (Climate Change).

“The difficult short-term objectives of growing renewable energy penetration in AEML’s power purchase mix from 3% to 30% by 2023 and then 60% by 2027 are legally covenanted aims that are compatible with the COP26 targets,” stated Kandarp Patel, MD & CEO, AEML.

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“In the short term, AEML has set some of the nation’s most demanding renewable penetration objectives, demonstrating our commitment to net-zero emissions. We’ve also committed to a short-term goal of reducing Green House Gas (GHG) Emission Intensity by 60% from FY19 levels to meet COP26 objectives. We have officially established a target of 70% renewable penetration by 2030, in addition to the legally mandated targets,” Patel added.

The issue adds to the Adani Group’s excellent capital raising track record from global capital market participants. The Adani Group will use the money to refinance current debt and create regulatory assets to enable ‘asset hardening .’ The deal will be finalised on July 22, 2021.

The assurance of the Sustainability Framework was completed through external agencies. Vigeo Eiris, a Moody’s Investor Service subsidiary, provided a second party opinion on AEML’s Sustainability Framework. The baselines for the targets have been assured by third-party verifiers – the British Standards Institute and the statutory auditor of AEML.

The JLMs to the transaction were Axis Bank, Barclays, Citigroup, DBS Bank, Deutsche Bank, Emirates NBD Capital, JP Morgan, Mizuho Securities, MUFG, and Standard Chartered Bank. MUFG acted as the sole Sustainability Linked Bond structuring advisor. The JLMs were represented by Latham & Watkins and Cyril Amarchand Mangaldas. Linklaters and L&L Partners represented the Issuer.