Indian Renewable Energy Development Agency Ltd. will launch its initial public offering on Nov. 21.
The state-run company plans to raise Rs 2,150 crore via a fresh issue and an offer for sale.
The IPO will comprise a fresh issue of 40.32 crore equity shares worth up to Rs 1,290 crore. The company also has an offer for sale of 26.69 crore shares, worth up to Rs 860 crore, by promoter selling shareholder.
The price band is fixed between Rs 30 and Rs 32 per share. At the upper price band, the company is valued at a Rs 8,600.85 crore market capitalization.
Out of the total IPO size, 50% is reserved for qualified institutional buyers, 15% for non-institutional investors, and the remaining 35% is to be allotted to retail individual investors.
Issue Details
Issue opens: Nov. 21.
Issue closes: Nov. 23.
Total offer size: Rs 2,150 crore.
Fresh issue size: Rs 1,290 crore.
Offer for sale size: Rs 860 crore.
Face value: Rs 10 apiece.
Fixed price band: Rs 30–32 per share.
Lot size: 460 shares.
Listing: NSE, BSE.
Shareholding Pattern
The pre-IPO shareholding stands at 2,28,46,00,000 and will increase to 2,68,77,64,706 after the initial public offering.
Promoters selling shareholders will be taking part in the offer for sale. The President of India, acting through the Ministry of New and Renewable Energy, Government of India, will be offloading a total of 2.69 crore shares.
Post-IPO, the promoter and public group shareholding to public shareholding ratio will stand at 75:25, from 100% with the promoter and public group category previously.
Business
Incorporated in 1987, Indian Renewable Energy Development Agency Limited is a public limited government company. It is a Mini Ratna (Category - I) government enterprise and is administratively controlled by the Ministry of New and Renewable Energy.
The company operates in four key sectors: solar, wind, hydro, biomass, biofuels and cogeneration.
IREDA is a non-banking financial institution that promotes, develops and extends financial assistance for new and renewable projects. With 36 years of experience under their belt, the company provides a comprehensive range of financial products and related services, from project conceptualization to post - commissioning, for renewable energy projects and other value chain activities, such as equipment manufacturing and transmission.
Use of Proceeds
The offer includes a fresh issue and an offer for sale. The company will not receive any proceeds from the offer for sale part of the issues, and all proceeds from the OFS will be received by the promoter selling shareholder.
The company intends to utilise the net proceeds from the fresh issue for the following purposes:
To augment the company's capital base to meet future capital requirements and onward lending.
Financials
As of September 2023, the total term loans outstanding stood at Rs 47,514.48 crore. The term loan outstanding compounded annual growth rate between FY21 and FY23 stands at 30%.
The company has sanctioned loans worth Rs 4,744.50 crore for the six months ending in September 2023, and the loans sanctioned in FY23 stood at Rs 32,586.61 crore. Loans disbursed as of FY23 and six months ended September 2023 stand at Rs 216,39.21 crore and Rs 6,273.25 crore, respectively.
The net interest margin and net NPA as of March 2023 stood at 3.32% and 1.66%, respectively.
Strategy Going Forward
The company aims to launch financing products for new business models, for example, captive and merchant segments. The company plans to strengthen its position in consortium financing for larger utility-scale solar and wind projects. Additionally, it will aid developers in accessing capital markets through methods such as securitization and InvIT financing.
The company already has some early wind in terms of their future strategy; it has signed MoUs for co-lending and co-origination of renewable projects with the Bank of India, the Bank of Baroda, the Union Bank of India, and the India Infrastructure Finance Company. It has also entered MoUs with Satluj Jal Vidyut Nigam, Nation Hydro- electrical Power Corporation, for techno- commercial advisory services.
Risk Factors
The business and its financial performance could suffer if they are unable to effectively manage the quality of their growing asset portfolio and control the level of our non-performing assets.
The company's NPAs may increase due to the inability of borrowers to repay loans due to factors such as delay in payment from state electricity distribution companies, tariff and regulatory-related issues, force majeure events like droughts, floods, etc., delay in project implementation and commissioning, among others.
Volatility in interest rates could adversely affect the business, hedging instruments, net interest income and net interest margin, which in turn would affect the business and its operations.
The company's credit ratings have been downgraded in the past. Any future downgrade in credit ratings could affect the business and its financial conditions.
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