HFE Equity

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The proposed transaction is an equity investment of upto USD 125 million in Hero Future Energies Private Limited (“HFE” or the “company”), a leading developer of solar and wind power projects in India. The company is part of Hero Group (the “group”), a leading industrial conglomerate and a market leader in automotive manufacturing, mainly two wheeler motorbikes and ancillary businesses with Hero MotoCorp Limited being its flagship entity. The group also has other diversified business interests in the country and abroad.Since its incorporation in 2012, the company has identified projects of more than 2 GW and plans have a total installed capacity of around 1000 MW in the next 12 months. Both operational and under construction projects are located in the Indian states of Andhra Pradesh, Madhya Pradesh, Karnataka, Maharashtra, Rajasthan, Tamil Nadu and Telangana. The company has also secured/implemented over 25 MW of rooftop projects and also plans to further expand its rooftop solar business. It is also actively looking to expand its international business in various geographies. The proposed IFC investment is part of fresh equity infusion to support the expansion plans for the company.All the projects are developed by/under wholly owned special purpose vehicles (SPVs) of HFE, HWEPL (Wind Holdco) and HSEPL (Solar Holdco). Most of the under construction capacity is being developed with third party engineering procurement construction (EPC) contracts signed with reputed technology suppliers. The contracts include supply, erection and commissioning (“E&C”) of wind turbines and solar panels. The SPVs also sign a comprehensive operation and maintenance (O&M) contract with these technology suppliers for long term operations/maintenance services. While the projects are mostly developed by third party contractors/vendors, HFE maintains very strong oversight over each processes (like land take, licensing, evacuation planning, technical aspects etc.) and is deeply involved in the project development. This is done through a dedicated team of qualified personnel at the site supported by a larger team of technical experts based at the corporate office and in charge of overall project development at the company level.Update related to additional investment under the COVID-19 response facility: IFC has committed INR 3,750 million to Hero Future Energies Private Limited on June 11, 2020. The investment is in the form of senior secured NCDs issued to IFC by HFE's wholly owned subsidiaries, Hero Solar Energy Private Limited (HSE) and Hero Future Energies Private Limited (HWE) for the purposes of refinancing their existing debt (“New Project”). In the current pandemic the Company faces an increased risk of payment delays from power distribution companies and tougher refinancing of existing debt due to lockdown, risk aversion and liquidity constraints in the domestic financial markets.