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FMO
YES BANK, India’s fifth largest Private Sector Bank, announced that it will raise INR 330 crore (approximately USD 50 million equivalent) through an issue of a 7-year Green Infrastructure Bonds to FMO, on a private placement basis. FMO will be investing in YES BANK’s bonds through FMO’s own sustainable bonds. The definitive agreement was signed at the fourth edition of FMO’s Future of Finance conference being held in Katwijk, The Netherlands.
This is FMO’s 1st Investment in a Green Bond issued by a bank in India. The amount raised will be used by YES BANK to finance Green Infrastructure including solar and wind projects in the renewable energy space. This issuance would be externally assured by a reputed third party. An external annual review and monitoring would be undertaken on the use of proceeds in line with the Green Bond Principles 2016. This is the third such green bond issuance by YES BANK in the last 18 months, after the highly successful maiden issuance of INR 1000 crore (USD 160 million equivalent) in February 2015 followed by the INR 315 crore (USD 50 million equivalent) private placement to International Finance Corporation (IFC), Washington in August 2015.
Mr. Rana Kapoor, Managing Director & CEO of YES BANK said, “This first-ever investment by FMO, Netherlands in a Green Bond in our country following IFC, Washington’s earlier investment in YES BANK’s Green Bond validates the tremendous commitment that global institutions have in YES BANK’s Responsible Banking ethos. This transaction further cements our bank’s status as a pioneer and market leader in Green Energy financing in India. YES BANK has been assiduously working to evolve even more innovative and effective financing structures to for the acceleration of Sustainable Energy Financing in India.”
Linda Broekhuizen, CIO of FMO, stresses the importance of sustainable development. “FMO is committed to making a positive impact on green financial development. Through the bonds, we aim to contribute towards a more sustainable future, creating opportunities for durable activities that follow the goals set during COP21 in Paris last year.”
With Responsible Banking as one of the key pillars of YES BANK the Bank is a barometer of India’s growth story. YES BANK on the occasion of COP21, had committed to target mobilizing USD 5 billion from 2015 to 2020 for climate action through lending, investing and raising capital towards mitigation, adaptation and resilience. This commitment was strengthened by indicating an action plan: target funding of 5,000 MW of clean energy gradually increasing the percentage of renewable energy in the power portfolio; contributing towards the carbon sink by planting 2 million trees; touching 100 million lives through its safe and clean drinking water program; and by offsetting carbon emissions of the bank’s operations. As a financial institution built on the fulcrum of Responsible Banking, YES BANK remains fully committed to helping the Government in establishing a platform for industry and other stakeholders for achieving the nation’s targets. Notably, YES BANK’s Green Bond issued in August 2015 has been awarded the ‘most innovative bond structure’ by Environmental Finance in May 2016, and YES BANK was recognised the ‘Green Bond – Pioneer in India’ by the Climate Bonds Initiative in February 2016.
India is currently actively tapping into its Renewable Energy Potential with the announced target of 175 GW of capacity installation by 2022, and favourable policy support. India is estimated to require over USD 150 billion (about 10 lakh crore equivalent) for achieving the renewable energy target by 2022.
Green Bonds have been emerging as one of the primary sources of financing for renewable energy across the world. Globally, the issues amounted to almost USD 46 billion in 2015, and India’s Green Bond market also has seen an exponential growth, touching USD 2 billion, post YES BANK’s first issue in February 2015. Such issuances will catalyze the market for Green Bonds in India and encourage responsible investors to facilitate funding towards Renewable and Clean Energy projects.
