Aseem Infrastructure Finance will become a 100 per cent climate finance NBFC following its proposed acquisition by TPG Rise Climate led investors, with the transaction expected to strengthen its balance sheet by releasing fresh capital, improving capital adequacy and reducing leverage, Managing Director and CEO Virender Pankaj told ETBFSI.
“Today, around 76 per cent of Aseem’s about Rs 18,250 crore asset book is green. As a result of this transaction, it will become 100 per cent. Aseem will not finance anything that has a drag on climate in future. We are going to be a 100 per cent green financing company,” Pankaj said.
Historically, the National Investment and Infrastructure Fund (NIIF) held a 59.05 per cent stake in the company, followed by the Government of India with 30.95 per cent and Japan’s Sumitomo Mitsui Banking Corporation (SMBC) with 10 per cent. The transaction, estimated to value Aseem Infrastructure Finance at around Rs 5,000 crore, will see the existing shareholders exit, with TPG Rise Climate acquiring the company alongside co-investors GIC and ICICI Bank, which will hold up to 5 per cent of the company.
As part of the transaction, Aseem will exit the remaining 24 per cent of its loan book comprising non green infrastructure assets. “The remaining 24 per cent of the portfolio comprises primarily roads and airport assets, which will be exited over the next few months,” Pankaj said.
“The way this transaction is structured, it will release about Rs 1,600 crore of capital, net of taxes, for Aseem. Additionally, Aseem will be shedding non green assets of more than Rs 4,500 crore. Thus, leverage will come down, capital adequacy will go up significantly and this will be credit positive for the company,” he said.
Overall, the transaction is expected to free up more than Rs 6,100 crore of liquidity and balance sheet capacity, positioning the lender for its next phase of expansion.
As per the Aseem Infrastructure Finance CEO, Capital adequacy is expected to improve to around 30 per cent from about 19 per cent once the deal closes.
The enhanced liquidity is also expected to reduce Aseem’s dependence on external borrowings.
“With the liquidity unlocked through the transaction, the company is not expected to require incremental borrowings for the next few quarters,” Pankaj said, adding that the lender may continue refinancing existing liabilities to optimise funding costs but does not foresee any increase in net borrowings during the period.
The transaction, announced earlier this month, will see TPG Rise Climate acquire Aseem Infrastructure Finance alongside co-investors GIC and ICICI Bank, subject to regulatory approvals.
The company is targeting operational readiness for the transaction by completing the sale of its non-green assets over the next 75 days, while applications seeking approval from the Reserve Bank of India (RBI) and the Competition Commission of India (CCI) are being processed in parallel.
“We are targeting to close the transaction within the next 75 days, subject to regulatory approvals,” Pankaj said.
