Ireda seeks government approval to sell up to 10% stake to raise ₹4,500 crore to fund growth

Mumbai: State-owned Indian Renewable Energy Development Agency (Ireda) has sought government approval to sell up to 10% stake as the non-bank lender aims to raise around ₹4,500 crore of equity capital to fund growth.

“We are seeking approval from the Government of India for a natural dilution of their stake by up to 10%. The government will take the final decision on this, but we are confident because we have made a preliminary assessment of what kind of capital requirement we have and what the sector expects from us ₹“We expect Rs 4,500 crore by January-February,” said chairman and managing director Pradip Kumar Das.

“This is to ensure that we have the right amount of loan book and also CRAR (capital to risk-weighted assets ratio), which is very important. Currently, CRAR is around 20% and we need to ensure 17-18% CRAR to have a healthy, stable AAA rating in the future,” Das said at the Financing 3.0 summit organised by industry body Confederation of Indian Industry (CII).

In the domestic market, Ireda has been rated ‘AAA’ by most of the major rating agencies including ICRA, India Ratings and CARE Ratings.

“Right now (the government’s stake in Ireda) is 75%, the final percentage they will allow, they will tell us. The process is at an advanced stage, so maybe in a few weeks we will get the final information on that,” he added on the sidelines of the event.

Ireda shares closed down 1% ₹239.10 on the Stock Exchange on Monday.

Last week, Ireda obtained an international credit rating from S&P Global Ratings, which gave it a long-term rating of “BBB-” and a short-term issuer rating of “A-3” with a “stable” outlook.

Das said that after the ratings are introduced, the non-bank renewable energy lender will tap overseas markets to raise funds and reduce borrowing costs.

“Our borrowings from the debt market will amount to approximately ₹25,000 crore and from the equity market about ₹4,500 crore,” Das said, adding that the company is considering multiple options and will raise funds wherever it gets “cheap money from abroad”, including from development finance institutions and multilateral organisations.

Ireda is also waiting for the commencement of operations in its GIFT City branch, which will help it obtain foreign funds.

“We are yet to receive the permission to start operations. It is in the process and once we get it, we will raise funds through it. Our target is to complete it in 2-3 months,” Das said, adding that the company may consider issuing various types of bonds, including social bonds, sustainability-linked debt and green finance funds, among others.

“Once GIFT City is operational, we will be able to facilitate foreign financing through this office, so the developer will get a reduction of at least 3-4% in foreign financing, which is a significant amount.”

Das added that the company had also sought inclusion in the list of companies eligible for tax exemptions under Section 54EC of the Income Tax Act, 1961. This section allows deduction of long-term capital gains up to ₹50 lakh came from capital gains bonds issued by lenders like Rural Electrification Corporation (REC), National Highway Authority of India (NHAI), Power Finance Corporation (PFC) and Indian Railway Finance Corporation (IRFC).

“Our goal is 54EC. What is available to others should be given to me, which is easy to do. It is a government process, they have already announced the bucket. They just need to add us to the list, the work is in progress,” Das said.