Structure
Structuring the Right Debt Stack: Instrument Selection Matched to Capital Plan & Tenor
Once your funding strategy and eligibility are framed, we translate it into an actionable capital structure — selecting and blending sustainability-linked loans, green bonds/loans, non-recourse project debt and mezzanine layers to match your project's cash-flow profile, tenor needs and cost-of-capital targets, while preserving covenant headroom and refinancing flexibility.
Typical duration · 4-6 weeks
Samples generated 09 Sept 2026, 06:46 am ISTWhat happens in this step
- 01Review project cash-flow model, revenue contracts and risk allocation to determine debt capacity and optimal tenor bands
- 02Screen eligible instruments — SLLs, green/climate bonds, ECB, non-recourse project finance, mezzanine/subordinated debt — against RBI/FEMA and green-taxonomy criteria
- 03Model blended tranche structures (senior + mezzanine + green tranche) to test DSCR, leverage and pricing outcomes under multiple scenarios
- 04Define KPI/SPT frameworks for sustainability-linked pricing ratchets and align with target certifications (e.g. CBI, LMA/APLMA Green Loan Principles)
- 05Assess security package, cash-waterfall and covenant package for each instrument option, including DSRA, MMRA and step-in rights
- 06Prepare comparative term-sheet framework and recommend the instrument mix, with rationale, to the client's investment committee
- 07Finalise financing structure memo and hand over to Market & Negotiate phase with lender long-list and pitch materials
What we need from you
- Latest 10-15 year cash-flow / financial model with base and downside cases
- PPA/PSA or merchant revenue assumptions and offtake counterparty credit profile
- EPC/O&M contract terms and technology risk assessment
- Existing group debt covenants and any cross-default or negative-pledge constraints
- Target leverage, minimum equity IRR and preferred tenor from sponsor's capital plan
- Sustainability policy or ESG framework (if SLL/KPI structure is being considered)
- Corporate rating or standalone project credit assessment, if available
Worked example (anonymised, illustrative)
Standalone BESS Capital Structuring · 300 MW / 600 MWh · Western India
DISCOM-awarded capacity contract with availability-based payments; sponsor evaluating blended senior + green mezzanine structure to fund EPC and 15-year O&M reserve.
Sample deliverables from this step
Every sample below is analyst-written and anonymised for illustration — structure and depth mirror our real deliverables; figures and names are not from any client engagement.
Illustrative · Growthifye-preparedCapital Structure & Instrument Selection Memo
Comparative assessment of candidate instruments against the project's cash-flow profile, recommending an optimal blended structure with rationale and risk flags.
Sample excerpt · Instrument Comparison Summary — illustrative figures
| Instrument | Indicative Tenor | Indicative Pricing | Security | Suitability |
| Senior non-recourse project debt | 14 yrs | 10.4-10.8% p.a. | First charge on assets, DSRA 6mo | Base layer, availability-linked cash flows |
| Sustainability-Linked Loan (SLL) | 10 yrs | 10.1% (ratchet ±15bps on KPI) | Pari-passu with senior | If KPI reporting capability exists |
| Green bond (INR, listed) | 7-10 yrs | 9.9-10.3% | Debenture trustee security | If issuance scale >INR 300 Cr |
| Mezzanine/subordinated debt | 7 yrs (bullet) | 14-16% + equity kicker | Second charge / structural sub | Bridges equity gap, higher cost |
| ECB (foreign currency) | 10 yrs | SOFR+2.5-3.0% | Hedged, RBI compliant | If natural/synthetic hedge available |
- Pricing bands illustrative, subject to lender credit view
- KPI ratchets require independent verifier appointment
Illustrative · Growthifye-preparedDebt Sizing & Sculpting Model
Tranche-wise sizing model sculpting debt service to project cash flows, testing minimum DSCR, leverage limits and reserve requirements across tranches.
Sample excerpt · Tranche Sizing Summary (Illustrative) — illustrative figures
| Tranche | Amount (INR Cr) | Min DSCR | Tenor (yrs) | Indicative Rate |
| Senior Green Tranche | 520 | 1.30x | 14 | 10.2% |
| SLL Tranche | 180 | 1.25x | 10 | 10.1% ± ratchet |
| Mezzanine | 90 | 1.10x | 7 (bullet) | 15.0% |
| Total Debt | 790 | - | - | Blended 10.9% |
| Sponsor Equity | 260 | - | - | - |
- Base case uses P90 generation/availability assumptions
- Sensitivity run includes ±10% capex and 12-month COD delay scenarios
Term Sheet Comparison Matrix
Side-by-side comparison of indicative lender term sheets to support instrument and lender shortlisting ahead of the Market & Negotiate phase.
Sample excerpt · Indicative Term Sheet Grid — illustrative figures
| Lender Type | Instrument | Margin over benchmark | Key Covenant | DSRA Requirement |
| Domestic Bank A | Senior term loan | 2.75% | Min DSCR 1.25x | 6 months |
| Green Bond Investor B | Green NCD | 2.45% | Use-of-proceeds certification | 3 months + trustee reserve |
| NBFC/Infra Fund C | Mezzanine | EIRR 15% | Cash sweep post base debt | Nil (structural sub) |
| Multilateral D | SLL (concessional) | 1.9% + KPI ratchet | Annual KPI audit | 6 months |
- All terms indicative pending credit committee sign-off
- Final selection deferred to negotiation stage
Indicative Financing & Drawdown Schedule
Milestone-based drawdown plan aligning tranche availability with construction progress and conditions precedent.
Sample excerpt · Drawdown Milestone Plan — illustrative figures
| Milestone | Target Month | Tranche Drawn | Drawdown % | Key Condition Precedent |
| Financial Close | M0 | Senior + SLL | 20% | Security perfection, PPA/PSA effectiveness |
| EPC Notice to Proceed | M1 | Senior | 15% | Insurance in place |
| 50% Construction | M7 | Senior + Mezzanine | 30% | Independent engineer certificate |
| Mechanical Completion | M12 | Senior | 20% | Grid connection agreement |
| COD / Final Drawdown | M15 | All tranches | 15% | Performance test pass, DSRA funded |
- Schedule illustrative; actual CPs vary by lender and instrument
Outcomes
- A financing structure with instrument mix matched to project risk, tenor and cost-of-capital objectives
- Quantified debt capacity and sculpted repayment profile validated against downside scenarios
- A defensible, lender-ready term sheet comparison to accelerate the negotiation phase
- Reduced blended cost of capital through appropriate use of green/SLL pricing incentives
Questions clients ask
Can we combine an SLL with a green bond in the same capital stack?
Yes — blended structures are common, provided use-of-proceeds and KPI frameworks are clearly segregated and each instrument's reporting obligations are independently trackable.
How do you decide between non-recourse project debt and corporate/SLL structures?
It depends on sponsor balance-sheet capacity, desired off-balance-sheet treatment, and whether the asset's cash flows can independently support debt service without recourse to the parent.
Does mezzanine debt affect our ability to raise green-labelled instruments later?
Not inherently, but subordination terms and cash-sweep mechanics need careful drafting to avoid conflicting with senior green-loan or bond covenants; we structure inter-creditor terms to preserve future refinancing flexibility.
