IFC Picks up Green Bonds worth $50 Million from Tata Capital Arm
The green financing division of Tata Capital, Tata Cleantech Capital, announced on Monday that its equity partner International Finance Corporation has purchased its sustainability-linked bonds for $50 million, or roughly 375 crore.
The funds will help Tata Cleantech Capital, a joint venture between Tata Capital and the IFC, strengthen its position as a leading green financier by funding climate and sustainability projects. The bonds are the first ones issued in the nation by a private financial institution.
The firm will use the money to scale up on-lending towards renewable energy projects and diversify into energy efficiency and e-mobility sectors over the next three years, it said, adding this is the first such instrument issued by a private financial institution in the country and will support the shift to a clean energy economy.
According to Manish Chourasia, managing director of Tata Cleantech Capital, "IFC's innovative financing structure will strengthen our green financing portfolio while also helping diversify our borrowings profile in the fight against climate change."
The IFC estimates that the country will require around $403 billion in renewable finance by 2030 to meet its renewable targets, which include the government's goal of reducing carbon intensity by more than 45% by 2030 compared to 2005 levels.
According to IFC portfolio manager Joon Young Park, the project will provide a much-needed boost to the country's debt capital market, which is critical to achieving sustainable and inclusive growth.
Sustainability-linked bonds, along with green, social, and sustainable (GSS) bonds, are a rapidly growing capital market instrument to support global sustainable development.
These bonds go beyond the end-use-focused approach of GSS instruments, assisting organisations in improving performance against tailor-made environment, social, and governance targets that also contribute to the UN's climate goals.