Government Approves Renewable Sector Lender IREDA’s IPO
The government will sell a part of its stake in the company
March 20, 2023
The Indian Renewable Energy Development Agency (IREDA) has received the cabinet nod for listing on stock exchanges after an Initial Public Offering (IPO) via a part sale of the government’s stake in the company.
The approval was granted due to the recent change in capital structure in IREDA following the infusion of ₹15 billion (~$181.75 million) by the government early last year.
The Department of Investment and Public Asset Management (DIPAM) will be responsible for the listing process.
The approval was granted by the Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi to help raise funds for the government-owned lender through the issue of fresh equity shares.
The Central Public Sector Enterprise (CPSE) stock listing will help the public acquire the government’s stake in the company and unlock the value of the government’s investment.
The IPO is also expected to help IREDA raise a part of its capital requirement for meeting the growth plans without depending on the public exchequer and improve governance through greater market discipline and transparency arising from listing requirements and disclosures.
The Government had set a revenue target of ₹33.61 billion (~$407.24 million) for the financial year (FY) 2022-23 for IREDA, 18% higher than the previous year’s revenue from operations.
IREDA has played a vital role in the government’s target for achieving the set renewable target by 2030 by financing renewable energy projects in the country.
The government-owned lender has sanctioned renewable energy loans amounting to more than ₹1.45 trillion (~$17.57 billion) and financed renewable energy loans exceeding ₹920 billion (~$11.15 billion) to date, with a loan book size exceeding ₹400 billion (~$4.85 billion).
In June 2017, the CCEA allowed IREDA to issue 139 million fresh equity shares of ₹10 (~$0.12) each to the public through IPO on a book-building basis.
The organization was recently granted an ‘Infrastructure Finance Company’ status by the Reserve Bank of India, enabling better exposure to renewable energy sector financing and achieving competitive fundraising rates by providing access to a broader investor base.
It also announced plans to finance renewable energy projects in foreign currency for which an office would be established in Gujarat International Finance Tec-City (GIFT City) in Gandhinagar.
IREDA posted a profit of ₹2 billion (~$24.23 million) for the third quarter (Q3) of FY 2022-23, a jump of 88% year-over-year (YoY).