IPO-bound IREDA eyes emerging RE bets

Future energy will be coming from existing and newer renewables, and it is not possible to transition into greener energy without that.

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CHENNAI:  Indian Renewable Energy development agency Limited, a public sector undertaking under the ministry of new and renewable energy (MNRE), hopes to increase its lending business in the emerging renewable energy sources such as green hydrogen and electric mobility.

The company thinks it is essential for the energy transition and the higher risk will yield higher returns.
Speaking to media, Pradip Kumar Das, Managing Director of IREDA said that there is a huge demand for the emerging renewable sources. Future energy will be coming from existing and newer renewables, and it is not possible to transition into greener energy without that.

The lending portfolio of the newer sources than conventional renewables will be increased to 50% from 18% at present, Das said. However, he didn’t mention a specific timeline. He said though these technologies are not commercially viable at the moment but it could be changed with R&D and scaling. “Any new and emerging technologies will be risky. Risk mitigation should be done and wherever you think it cannot be derisked, add a risk premium into that,” he added.

The state-owned NBFC has been focused on solar, wind and hydro project financing for 27 years now. It also provides manufacturing and equipment loans, bridge loans  and  loans against future cash flows. IREDA extends credit lines for other NBFCs for renewable power and energy efficiency and conservation (EEC) projects. It offers letters of comfort and other non-fund products.

Indian Renewable Energy development agency has term loans outstanding of R 47,206 crore as of September 30, 2023. It has a net interest income of R 1,332 crore and a net profit of R864.6 crore in the 2022-23 fiscal. The initial public offering (IPO) of IREDA will open to the public on Tuesday (November 21) and closes on Thursday (November 24).

It comprises fresh equity shares of up to 403,164,706 and offer for sale of 268,776,471 shares aggregating up to 671,941,177 equity shares. The price band has been fixed at R 30- R32. Minimum bid lot is 460 shares and in the multiples of 460 after that. Public sector non-banking finance entity plans to raise R 2,150 crore on the higher end from the issue.

Proceeds from the fresh issue will be used for increasing the capital base to meet future capital requirements and future lending, IREDA stated in the draft proposal. The company plans to use proceeds to undertake existing business and fund future activities from the net proceeds. Offer for Sale will be received by the promoter selling shareholder – Government of India and the company will not receive any proceeds from that component.IDBI Capital, BOB capital market limited and SBI Capital market limited have been announced as the book running lead managers.


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