November 2023 was an eventful month for investors focused on IPOs. The month saw the Indian Renewable Energy Development Agency’s (IREDA) IPO listed on the National Stock Exchange and the Bombay Stock Exchange.
The IREDA IPO is the second public sector IPO since the Life Insurance Corporation of India made its IPO offering in May 2022. It is India’s leading infrastructure finance company (IFC) and the most significant green financing Non-banking Finance Company in India. IREDA is a ‘mini-ratna’ (Category -1) with 30+ years of experience in developing, promoting, lending, and investing in renewable energy (RE) and energy efficiency and conservation (EEC) projects. The IPO generated considerable interest among investors owing to its investment prospects. Equentis Wealth Advisory Services Private Limited, a reputed stock market advisory, received overwhelming inquiries. It has proven expertise in helping clients select valuable stocks for wealth creation.
Before explaining the IPO details, knowing a little about the RE industry in India will be helpful. In rеcеnt yеars, India has еmеrgеd as a global lеadеr in thе pursuit of sustainablе еnеrgy solutions and with a notable focus on renewable еnеrgy sourcеs. The country’s RE industry has witnеssеd rеmarkablе growth following a combination of policy initiativеs and technological advances. Thanks to these massive efforts, India stands fourth globally in RE installed capacity (including large hydro) and fourth in wind and solar power capacity. The total installed capacity of RE from non-fossil fuel sources is 172.72 GW as of October-end 2022.
IREDA, set up under the Ministry of Renewable Energy (MNRE), is at the forefront of implementing policy initiatives and making India a clean energy country. This article looks into the details of the IREDA IPO and explores its mission, vision, and plans.
IREDA IPO: Details
The IREDA IPO was a book-built issue that opened for subscription on 21 November 2023 and closed on 23 November 2023. Before this, the IPO was opened to anchor investors on 20 November 2023 to raise Rs 643.26 crore from the issue of 20.010 crore shares.
The wholly-owned government enterprise, under the Ministry of New and Renewable Energy (MNRE), came out with the IPO to raise Rs 2,150.21 crore through a fresh issue of 40.31 crore shares and an Offer for Sale (OFS) of 26.88 crore shares. With this, the IFC planned to raise Rs.1,290.13 crore and Rs. 860.08 crore respectively. However, it will not receive any proceeds from the OFS.
| IREDA IPO Details | |
| Open Date | 21 Nov, 2023 |
| Close Date | 23 Nov, 2023 |
| Lot Size | 460 |
| Minimum Investment | ₹14,720.00 |
| Issue Price | ₹ 30 – ₹ 32 |
| Listing Date | 29 Nov, 2023 |
| Listing On | BSE, NSE |
| Issue Size | ₹ 2,150.21 Cr |
| Face Value | ₹ 10 |
| Total Shares Offered | 671,941,178 |
| Offered To Public | 234,523,015 |
| Retail Max (Shares/Amount) | 5,980/₹191,360 |
| Pre-Issue Promoters Holding | – |
| Sector | Power |
| Sub Sector | Power Generation/Distribution |
| Issue Type | Public Cum Offer for Sale (Book Building) |
| Source: https://www.moneycontrol.com/ipo/indian-renewable-energy-development-agency-iredal-ipodetail | |
The price band for the issue was fixed at Rs. 30 and Rs. 32 per share. The lot size was 460 equity shares, and investors could bid for a minimum of 460 shares and multiples with a minimum investment of Rs. 13,800 and a maximum of Rs. 14,720.
| IREDA IPO: Category-wise Subscription | |
| Category | Subscription Times* |
| Qualified Institutional Buyers | 104.57x |
| Retail Institutional Investors | 7.73x |
| Non-institutional investors | 24.16x |
| Others | 9.8x |
| Total | 38.8x |
| Source: https://www.moneycontrol.com/ipo/indian-renewable-energy-development-agency-iredal-ipodetail#google_vignette | |
| * – As of 23 November 2023. | |
As for its category-wise subscription, the IPO was subscribed 38.8 times as of 23 November 2023. The Qualified Institutional Borrowers subscribed 104.57x, while the Retail Institutional Investors category subscribed 7.73x. Subscription by the Non-institutional Investors category was 24.16x, and that by others was 9.8x.
On 29 November 2023, the stock listed on the BSE at Rs. 50, at a premium of 56.25% over the issue price of Rs. 32. Its listing price on the NSE was also Rs. 50.
Objectives of the IPO
From the proceeds raised by way of IPO, IREDA will,
– Strengthen its capital base to meet future capital requirements and onward lending.
– The other benefits expected to accrue from the IPO listing are enhanced brand image among current and future customers and creation of a market for equity shares in India.
Mission
IREDA’s mission is to “Be a pioneering, participant-friendly, and competitive institution for financing and promoting self-sustaining investment in energy generation from Renewable Sources, Energy Efficiency, and Environmental Technologies for sustainable development.”
In keeping with this mission, the leading IFC has the following objectives under its mission statement:
– To offer financial support to specific projects and schemes for generating electricity and energy through new and renewable sources and conserving energy through energy efficiency.
– To increase IREDA’s share in the renewable energy sector through innovative financing.
– Improving customer service efficiency by continually improving systems, processes, and resources.
– To strive to be a competitive institution through customer satisfaction.
Vision
As India’s leading IFC for RE and EEC projects, IREDA envisions maintaining its position as a leading organization providing efficient and effective financing in renewable energy and energy efficiency/conservation projects.
IREDA enjoys a strategic position as a financer of wind, hydro, solar, bio-energy sectors and battery-powered mobility. It offers short-, medium– and long-term finance for RE developers and manufacturers and a line of credit to NBFCs for on-lending to players in the RE and EEC segment. It also provides loans to government entities.
Its scope also includes issuing letters of comfort and payment on order instruments and offering consultation services on technical-commercial issues in the RE sector.
Also, by participating in schemes launched by the MNRE and executing its responsibilities, IREDA strengthens its position as India’s apex authority in financing RE and EEC projects in power and mobility.
Future Plans
The Government of India has set short-term and long-term targets under the Panchamrit action plan, building a non-fossil energy capacity of 500 gigawatts (GW) by 2030 and net zero by 2070. With only 16.5% of the final energy consumption at the national level, there is a vast need and scope to integrate RE into the economy. It calls for focus and increased investments in emerging technologies in the industry and transport sectors. To meet this goal, developing robust manufacturing and deploying infrastructure for Battery Energy Storage Systems (BESS), Green Hydrogen, Biofuel, greenmobility and charging infrastructure will be crucial.
Given the need for sustainable alternatives for mobility, IREDA is already financing Battery Energy Storage Systems (BESS), Green Hydrogen, Biofuel, green mobility, and charging infrastructure shall play a significant role.
The nodal agency for clean and sustainable technology has established terms and conditions for financing, manufacturing/new technologies, and the electric mobility segment. It has specified guidelines for fleet owner/operator and charging infrastructure.
Also, the central government is backing emission reduction policies such as the National Green Hydrogen Mission and has allocated ₹190 billion to establish India as a global hub for green hydrogen. It has set a target of 30% electric vehicle (EV) adoption by 2030 and installing 46,397 public charging stations. Major industries are complying with the decarbonization measures to contribute to net zero.
With a sharp focus on RE, IREDA’s role as a lender to power-focused NBFCs is further enhanced. Also, IREDA will keep up its R&D to develop the best practices in RE and EEC that are available internationally.
It is poised to fund ethanol and biogas projects in the coming days. Through its dedicated Business Development Team, IREDA will develop innovative financial products. It aims to enjoy an early-mover advantage in funding green hydrogen, its derivatives, and other emerging technologies. It will help it tap into new markets and diversify its revenue streams.
Conclusion
IREDA’s journey from a government-owned enterprise to a publicly traded company is more than a financial milestone. It is a step toward making India a clean energy country. Given India’s target of achieving 500 GW of non-fossil energy capacity by 2030 and net zero emission by 2070, IREDA has a significant role.
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