Wind enrgy major Caparo raises Rs350cr via ‘mezzanine’ funding

Wind energy producer Caparo Energy has raised $78.5 million (Rs350 crore) through the issue of preferred shares to the India Infrastructure Fund, a fund managed by IDFC Project Equity Co, as it starts tying up funds to achieve its target of 700 MW in wind energy generation capacity.

The 'mezzanine funding' is for a six-year term and will not dilute equity, the company said in a press release.

Mezzanine funding typically includes both equity and debt components and comes at a high interest rate. It is mainly used to finance the expansion of companies without diluting share capital.

Morgan Stanley was the advisor to Caparo for the fund-raising. The interest rate is around 14 per cent.

Caparo is also at an advanced stage of raising another $33.5 million (Rs150 crore), and the deal is expected to get finalised in the next few weeks, it said.

"The terms of both these tranches of financing entail no equity dilution for Caparo Energy's existing shareholders and this will result in enhanced equity returns for the investors. The company expects to repay the preference shares from internal cash-flows, issue of senior debt instruments, bonds or other debt refinancing, in three to five years," the release said.