NaBFID extends Rs 2,000 crore loan to Blackstone-backed data centre

A senior executive with a public sector lender said NaBFID, a government-owned infrastructure financier, has extended a loan (construction finance)

The National Bank for Financing Infrastructure and Development (NaBFID) is extending a Rs 2,000 crore loan to Blackstone-backed Gramercy Techpark Private Ltd for construction of a 120 megawatt (MW) data centre at Mahape in New Mumbai.

 

This will be the second such data centre by Gramercy in New Mumbai where the construction is expected to start in mid of this year.

 

Senior executive with a public sector lender said that NaBFID has extended the loan (construction finance) and it is now looking to bring other lenders on-board by offloading part of its exposure.

 

The data centre company did not respond to the queries from Business Standard by the time of going to press.

 

As part of due diligence, the government-owned infrastructure financier has looked at occupancy prospects since that gives visibility on cash flows for upkeep and repayments. It has also considered the power supply arrangements also, bank executive said.

 

Many hyper-scalers (large capacity data centres) have term contracts with tenants, giving stability for cash flows through rentals.

 

According to Crisil Ratings, data centres cater to the computing and storage infrastructure demand, which is driven by two primary drivers. One, enterprises are rapidly shifting their businesses to digital platforms, including cloud, a trend that has accelerated post Covid-19 pandemic. Two, increased accessibility of high-speed data has led to a surge in internet usage, including social media, over-the-top (OTT) platforms and digital payments.

 

In addition to the ongoing demand, rapid advancement of GenAI, which requires higher computational power and low latency than traditional cloud computing functions will also provide tailwind to the data centre demand in India.

 

Typically, the debt to equity ratio for such data centre projects is about 80:20. These are capital intensive projects involving highly automated set-up. The employment generation is minimal and has limited benefits for the surrounding ecosystem in terms of generation of economic activity.

 

According to Crisil, to meet the growing data centre demand, an investment of Rs 55,000-65,000 crore is required over the next three fiscals, primarily towards land and building, power equipment and cooling solutions. Data centre operators typically build infrastructure -- land and building, which account for 25-30 per cent of overall capex -- with the expectation of future tie-ups.  

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  The loan will fund construction of 120 Mw facility at Mahape

  NaBFID is also looking to bring on board other lenders by offloading part of its exposure

  NaBFID has looked at occupancy prospects and considered power supply arrangements, too