Energy firm Soham raises Rs.125 cr from SBI fund

BANGALORE, INDIA: Independent power producer Soham Renewable Energy India Ltd Monday said it had raised Rs.125 crore from Macquaire-State Bank of India (SBI) Infrastructure Fund (MSIF) to finance its current and future projects.

"Of the Rs.375-crore Macquire-SBI Infrastructure Fund committed in August to invest in our energy projects, we are availing Rs.125 crore in the form of compulsory conversion preferential shares (CCPF) with a five-year lock-in period," Soham co-founder and managing director Sanjit S. Shetty told IANS here.

The Bangalore-based private power generating firm, which focuses on various segments of renewable energy such as hydro, wind, biomass, solar and photo-voltaics, operates two hydro projects in Karnataka and is executing five more similar projects in the southern state.

"The MSIF, which is the second round of funding, will enable us to complete the five projects in phases by fiscal 2014 to generate an additional 67 MW and bid for licences to acquire partly constructed and fully commissioned renewable energy projects," Shetty said.

Of the projects under execution, three are at Moodabidri in Dakishna Kannada district in the coastal area and one each at Srirangaptam near Mysore and Narayanpur dam near Yadgir in the northern region, about 500 km from Bangalore.

The company has agreements with Praxair, the Indian subsidiary of the global industrial gas supplier, to provide 22 MW captive power generated from its hydro-electric unit at Jog Falls near Shimoga, about 280 km from here, and with the state-run power utilities (Escoms) to supply 15 MW of power from its downstream hydro unit near Mangalore, about 350 km away.

The state-run SBI formed a joint venture with leading financial services group Macquaire in April 2009 with an initial capital of $1.04 billion to set up the MSIF. World Bank affiliate IFC (International Finance Corporation) is cornerstone investor in MSIF.

"We plan to raise further funds from the remaining Rs.250-crore MSIF has committed to invest in our projects. The dilution of holding for the venture fund will be in commensurate with the value of the preferential shares to be determined in 2015 after the five-year lock-in period," Shetty clarified.

In the first round of funding in January 2008, Soham raised Rs.59 crore from global investment firm D.E. Shaw group by diluting 29 percent of the paid-up equity held by promoters, including Shetty.

"In addition to the equity raised, we are in talks with some leading banks, including Andhra Bank, Axis Bank and Syndicate Bank, to raise debt for part-funding the projects underway," Shetty added.

Soham director Suchindra Shetty hoped the company's eco-friendly projects would contribute to addressing the huge energy deficit faced by power-starved states like Karnataka.

"In the process, we are also creating employment opportunities and augmenting the socio-economic development in the regions where the projects are coming up," the director noted.