Aditya Birla Group Secures $2.5 Billion in Bank Commitments for Shell Renewables Deal

A unit of billionaire Kumar Mangalam Birla’s conglomerate has received as much as 240 billion rupees ($2.5 billion) in commitments from at least four banks for an acquisition loan, 70% more than what it was planning for, according to people familiar with the matter.

Aditya Birla Group is seeking a 140 billion-rupee loan to finance the acquisition of Shell Plc’s renewable energy assets in India. Axis Bank and State Bank of India have each committed up to 70 billion rupees, while Union Bank of India and Punjab National Bank have offered credit lines of around 50 billion rupees apiece, the people said, asking not to be identified discussing private information. The actual disbursements would be less than those ceilings, they said.

The conglomerate is also in discussions with a few other large banks including HDFC Bank Ltd. and Kotak Mahindra Bank Ltd., which could also extend credit lines, the people said.

Representatives for Aditya Birla Group, Axis Bank, State Bank of India, Union Bank of India, Punjab National Bank, HDFC Bank and Kotak Mahindra Bank didn’t immediately respond to requests for comment.

The commitments underscore the strong appetite from Indian lenders for large corporate deals as they compete with global peers in financing big acquisitions in the country’s $40 billion-plus deals market. The Reserve Bank of India began allowing local banks to finance corporate acquisitions from July 1 in a bid to spur the economy.

Aditya Birla Renewables Ltd. will acquire 100% of Solenergi Power Pvt. to take control of its 5-gigawatt portfolio in the country. Solenergi owns Sprng Energy, which operates Shell’s renewables assets in India.

Interest rates on the club loan ranged from 7.6% to 7.7% with tenors of 12 to 20 years, the people said, adding it’s being taken by multiple special purpose vehicles backed by the company.

Loans extended by Indian banks grew 18.3% to 220 trillion rupees between January to Aug. 15, outpacing the 14.7% increase in deposits, central bank data show. India’s banking sector is likely to see a flood of liquidity after the country raised a record $127 billion from its vast diaspora through an aggressive push by lenders which is expected to drive down borrowing costs.