Aditya Birla Renewables is negotiating $1.5 billion in long-term loans from domestic banks, including State Bank of India and HDFC Bank, to fund its $1.8 billion acquisition of Shell’s Solenergi Power. The company aims to replace high-cost temporary bridge financing with cheaper project-level debt to improve financial margins before the deal closes by late 2026.
Aditya Birla Renewables is currently in talks with major Indian financial institutions to secure a $1.5 billion loan. This capital is intended to finance the company's $1.8 billion acquisition of Solenergi Power, the renewable energy unit previously owned by Shell. The move signals a strategic shift in how the company plans to fund its growing green energy portfolio.
The primary goal of this financing is to replace a $1.6 billion temporary bridge loan that the company had earlier arranged with MUFG Bank. In finance, a bridge loan is a short-term, expensive loan used to cover immediate costs until a more permanent funding arrangement is found. By shifting to long-term project-level debt, Aditya Birla Renewables aims to reduce its interest burden and create a more stable financial foundation for the newly acquired assets.
The company is negotiating this debt through 17 to 20 special purpose vehicles (SPVs). An SPV is a separate legal entity created for a specific project. By splitting the loan across these entities, the company can align the debt with the specific performance and cash flow of individual renewable energy sites, rather than taking one large, complex loan for the entire portfolio.
Major domestic lenders, including the State Bank of India and HDFC Bank, have been approached as part of this effort. This shift suggests that the Aditya Birla Group prefers to rely on domestic banking stability rather than keeping the more expensive international bridge financing on its books.
While this move is intended to save costs, it brings its own set of challenges. Integrating a large renewable energy portfolio, which includes roughly 5.0 GWp of capacity, involves significant operational and execution risks. Furthermore, a portion of these projects is still under construction. If there are delays in building these projects or integrating them into the existing business, it could impact the expected returns from the acquisition.
Investors may monitor the progress of this loan syndication and the overall acquisition timeline. The company plans to finalize this financing structure before the deal closes, which is expected by the end of 2026. Success will depend on the company's ability to convince domestic banks of the long-term viability of these projects, especially given the scale of the debt involved.