India’s Torrent Power is set to launch its largest-ever corporate bond issue to fund an acquisition, marking the first such bond sale of the current financial year, three merchant bankers told Reuters on Thursday.
The power producer plans to raise as much as ₹4,000 crore ($421.8 million) through the sale of longer-tenor bonds, the bankers said, adding that the company is expected to tap the market in May, with discussions likely to conclude within the next week.
Proceeds from the sale will be used to fund Torrent Power’s acquisition of Nabha Power, which was approved by India’s competition regulator earlier this month, the bankers said.
In February, Torrent Power said it would buy the coal-fired power plant operator from Larsen & Toubro for about ₹6,900 crore, including debt, as it steps up capacity in the region.
Bond issuance to fund acquisitions gathered pace in 2025 as companies sought to diversify funding sources away from banks.
The planned bond issue is expected to feature staggered redemptions, under which principal is repaid in multiple installments rather than as a lump sum at maturity.
The company may also issue three-year bonds to attract large mutual funds and lower the weighted average cost of borrowing, one of the bankers said.
“The company has also tied up with some mutual funds, so it is highly possible that they end up splitting the quantum in shorter as well as longer tenors,” one of the bankers said.
The bonds are rated AA+ by Crisil and India Ratings.
In March, Torrent Power raised ₹2,000 crore through staggered redemption bonds maturing in eight years, nine years and 10 year at an annual coupon of 7.97%.
Nabha Power operates a 1,400-megawatt coal-based plant in the northern state of Punjab and supplies all of its output to the state power corporation under a 25-year contract.
The acquisition will add to Torrent Power’s recent push to scale up its thermal portfolio, as utilities turn to coal-based capacity to meet India’s rising electricity demand.
The bankers requested anonymity as they are not authorised to speak to the media. Torrent Power did not immediately respond to a Reuters request for comment.
($1 = 94.8400 Indian rupees)