Unlike many other planned transactions that are spilling over to the next financial year, the Initial Public Offer (IPO) of the Indian Renewable Energy Development Agency (IREDA) to sell a 25% stake in the company to the public, will be completed by March, a senior official told FE.
The IREDA IPO will consist of a 10% stake sale by the government and 15% fresh equity issuance by the renewable energy project financier to fund its business expansion plan.
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“IREDA is raising capital as it plans to expand its business quite substantially. The company is in a growth phase that too in a sector like renewable energy, which is a fast-growing sector,” the official said, anticipating higher investor appetite for its stock.
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Being an election year most of the Centre’s strategic disinvestment plans including for sale of IDBI Bank and Container Corporation have been put on the back burner. As a result, the disinvestment receipts are likely to have a huge shortfall as against the target of Rs 51,000 crore for FY24. So far in the current financial year, the Centre has mobilised Rs 6,949 crore or 14% of the annual target.
“However, the IREDA IPO will happen within the current financial year,” the official said. The company filed a prospectus for the IPO last with market regulator Sebi last month.
The non-bank finance company IREDA, which is fully owned by the central government, is required to maintain capital to risk weighted asset ratio (CRAR) of 15%. Its CRAR was at 19.9% at end June 2023.
IREDA’s competitive strength is that it is the largest pure-play green financing NBFC in India. Its position in the market is underpinned by track record of growth, geared towards high-quality assets and diversified asset book and stable profitability.
As of March 31, 2023, IREDA’s term loans outstanding stood at Rs 47,075 crore, compared to Rs 27,854 crore as of March 31, 2021, increasing at a CAGR of 30%, and as of June 30, 2023, its term loans outstanding were Rs 47,206 crore.
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Its net profit at Rs 3,46 crore, Rs 6,34 crore, Rs 8,65 crore and Rs 2,95 crore for FY21, FY22, FY23 and the three months ended June 30, 2023, respectively, reflecting a CAGR of 58% between FY21 and FY23.
Its net NPAs as a percentage of net term loans outstanding reduced from 5.61% as of March 31, 2021 to 3.12% as of March 31, 2022, 1.66% as of March 31, 2023.
Till March 2023, the company has financed more than 3,068 RE projects loan accounts with cumulative loan sanction and disbursement to the tune of Rs 1.42 trillion and Rs 0.9 trillion respectively and has supported RE capacity addition of 19,502 MW in the country.
The Government, in line with the pledge made as a part of the Nationally Determined Contribution (NDC) in the Paris Accord on Climate Change, has set the targets of achieving 175 GW of installed RE capacity by 2022 and 500 GW by 2030. IREDA has a pivotal role to play in the achievement of RE targets.
