Introducing India’s first private sector green Masala Bond
responsAbility teams up with Electronica Finance Ltd.
Pune and Zurich, 16 April 2019 — A responsAbility-managed climate fund and Indian Non Banking Financial Company Electronica Finance Limited (EFL) have entered into an agreement for the issuance of green Masala Bonds. EFL has issued Rupee-denominated senior secured bonds of USD equivalent 10 million. The funds are dedicated to expanding ELF’s energy-efficient machinery lending portfolio for SMEs operating in the carbon-intensive manufacturing sector.
EFL is a Pune-based financier serving SMEs across India in the manufacturing and service sectors. The funds will be utilized for financing equipments in the machine tools, plastic and printing & packaging industries. Loans for financing these machines dominate EFL’s USD 180 m gross loan portfolio.
India has committed to reduce the emissions intensity of its GDP by one third between 2005 and 2030. The Indian SME sector currently contributes 45% of the country’s total greenhouse gas emissions from the manufacturing industries and is widely suffering from obsolete technology and lack of funding. All of this results in considerable potential for greenhouse gas mitigation.
EFL is an experienced player in the green lending sector, having associated with Small Industries Development Bank of India to originate loans to finance energy-efficient machines for over a decade. Through this green bond issuance, advised by Deloitte, the company seeks to further expand its technologically advanced, energy saving machine finance portfolio.
The partners have agreed on a multi-phase plan for both near-term and medium-term green lending development. EFL intends to leverage responsAbility’s ample international experience and the fund’s technical advisory support. It also plans to diversify its product offering and to expand into financing solar PV for the commercial and industrial markets. responsAbility expects to gain from the experience EFL has in financing machines for SME borrowers for more than two decades.
Ms. Shilpa Pophale, Managing Director of EFL, said: “We are pleased to team up with a successful international partner with proven expertise in driving green lending in emerging markets. By enabling Indian SMEs to improve their energy efficiency and processes we will further support them in making them competitive and our economy more sustainable and resilient.”
Speaking on behalf of responsibility, Jaskirat Chadha, Principal, Financial Institutions Debt for Asia-Pacific, explained: “Partnering with EFL, who is well established as a lender to the MSME segment to expand their energy efficiency lending portfolio, will allow us to integrate green lending into this sector and, as a result, sustainably reduce CO2 emissions.”
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About Electronica Finance Ltd (www.efl.co.in)
Electronica Finance Limited (EFL) is a Pune-based non-banking financial institution serving micro, small and medium enterprises in India’s SME manufacturing sector. With USD 180 m of assets under management, EFL is growing at a rapid pace with operations panning out in 45 branches in 14 cities covering industrial belts across India. EFL’s large product portfolio includes business loans, working capital loans & industrial property loans in addition to its flagship product of machinery loans. EFL aims to become the one stop shop for MSME customers financing needs.
About responsAbility Investments AG (www.responsability.com)
A leading asset manager for impact investments in emerging economies, responsAbility manages USD 3 bn of assets through a variety of investment vehicles that provide private debt and private equity to some 540 companies with inclusive business models across 90 countries. Founded in 2003, the company is headquartered in Zurich, Switzerland, and has local offices in Bangkok, Geneva, Hong Kong, Lima, Luxembourg, Mumbai, Nairobi, Oslo and Paris.