REC’s Mega Fundraise: Rs 1.55 Lakh Crore via Private NCDs

REC Ltd, the leading public infrastructure finance company under the Ministry of Power, has announced a massive fundraise proposal to support its long-term lending operations. The company’s board has approved raising up to Rs 1.55 lakh crore through Non-Convertible Debentures (NCDs) on a private placement basis during the financial year 2025–26.

This ambitious capital raise reflects REC’s critical role in financing India’s power and infrastructure sectors and comes at a time when India is rapidly expanding its renewable energy and transmission capacities to meet ambitious decarbonization goals.

What Are NCDs and Why Private Placement?

Non-Convertible Debentures (NCDs) are fixed-income instruments that offer investors regular interest payments. Unlike convertible debentures, these cannot be converted into equity shares. Companies like REC prefer NCDs for their predictable cost of borrowing and flexibility in structuring tenors and coupon rates.

A private placement allows the company to issue debt securities directly to a select group of investors—usually large institutions or high-net-worth individuals—rather than the general public. This route is quicker, more cost-efficient, and less regulatory-heavy compared to public issues.

Strategic Use of Funds: Powering the Power Sector

REC is likely to channel this capital into various government-backed and private sector infrastructure projects, including:

• Green energy financing: Supporting solar, wind, and hydro projects

• Transmission & distribution upgrades

• Smart metering and rural electrification

• Public-private partnership (PPP) infrastructure models

India is targeting 500 GW of non-fossil fuel capacity by 2030, and REC’s fund mobilisation will be crucial in bridging financing gaps for developers.

Strong Financial Position Enables Large-Scale Debt Mobilisation

REC’s creditworthiness and backing by the Government of India make it one of the most trusted issuers in the Indian debt markets. It has previously raised funds successfully via:

• Tax-free bonds

• Green bonds (including dollar-denominated issues)

• ECBs (External Commercial Borrowings)

The company maintains top-tier credit ratings (AAA/Stable) from agencies like CRISIL and ICRA, which ensures lower borrowing costs and high subscription from institutional buyers.

Global Investor Interest Expected

With rising global interest in ESG (Environmental, Social & Governance) themes and infrastructure investment, REC’s large-scale issuance is expected to attract sovereign wealth funds, global pension funds, and development finance institutions. The participation of foreign investors in Indian NCDs is facilitated through liberalised FPI (Foreign Portfolio Investor) rules.

Timeline and Regulatory Approval

Though the board has given the green light, REC will now require shareholder approval at the upcoming AGM. Tranches will be issued in phases depending on market appetite, project financing requirements, and interest rate trends.

Final Word

REC’s Rs 1.55 lakh crore fundraising via private NCDs is a landmark development in India’s infrastructure financing ecosystem. It not only underscores the trust REC commands in the debt markets but also reinforces the government's vision of energy security and sustainable growth.