IREDA may raise ₹5,000 cr through rights issue in fiscal 2025

Buoyed by growing investor optimism about India’s green energy transition, state-owned Indian Renewable Energy Development Authority (IREDA) expects to raise more than the planned ₹ 4,500-5,000 crore through a rights issue in fiscal 2025.

The non-banking financial company (NBFC) is looking to sell up to 10 per cent of its stake in the company, but the final decision in this regard rests with the central government.

The IREDA board has approved a proposal to raise ₹4,500 crore through follow-on public offer (FPO), qualified institutional placement (QIP), rights issue, preferential issue or any other permitted means.

Speaking to business line On the sidelines of RE-INVEST 2024, IREDA Chairman and Managing Director Pradip Kumar Das said, “We will enter the market by the end of this year. We need fresh capital of around ₹4,500-5,000 crore. We expect to raise more than that amount.”

RE-INVEST 2024 is organised by the Ministry of New and Renewable Energy (MNRE) in cooperation with CII.

Asked about the investor sentiment, he said foreign investors are now interested in India because of the country’s emphasis on clean energy products and services.

“If the government allows us to raise funds, we have several options including OFS, QIP, rights issue, as per SEBI guidelines. It depends on the final approval of the government, if required, we can further improvise within the approved percentage of the Government of India, depending on our business requirements,” he explained.

Sale of shares

Das said Navratna intends to sell up to 10 percent stake.

“Once we raise equity, the government’s stake will come down. For this, we have requested them to allow us to sell up to 10 percent. It is up to the government to decide how much they will allow us to sell. We hope to get their approval soon,” he added.

Besides, Das added, IREDA will raise money from the debt market.

“We plan to raise around ₹24,500 crore this year. It may increase by the end of this year. We also need to maintain asset quality along with growing our loan book. Our net NPA is 0.95 per cent. In our loan book, 74-76 per cent is in the private sector,” he said.

Clean Energy Commitments

IREDA also committed to increasing support for the transition to green energy.

“We have committed to fund an additional ₹5 lakh crore for renewable energy expansion by 2030. So far, we have committed to projects worth nearly ₹2 lakh crore and have funded a total renewable energy capacity of 27 gigawatts (GW),” Das said.

Das added that of this 27 GW, around 58 per cent comes from wind, solar and hydropower, 18 per cent comes from emerging and new areas like CNG, ethanol, charging infrastructure, e-mobility and 24 per cent comes from state-owned utilities for their renewable energy projects.

In the overall renewable energy lending space, around 35 per cent comes from NBFCs, 15 per cent from banks, another 50 per cent from others, including bonds. Out of the overall renewable energy lending, IREDA’s share is around 11.5-12 per cent, he noted.

GIFT City

IREDA also plans to enter the international market by financing projects abroad through its subsidiary GIFT City.

The energy and infrastructure lender will finance solar component manufacturing and green hydrogen business in India through a subsidiary, largely meeting export demand.

“We have opened our GIFT City office and will make it operational. We will lend and borrow from here and what will happen is that there will be no requirement of foreign exchange. Indian developers setting up projects here will get loans through GIFT City. We will also lend to Indian companies setting up projects abroad,” Das said.

IREDA set up its subsidiary at the International Financial Services Centre (IFSC) based in Gift City, Gujarat in May 2024 and is yet to transact its first transaction.

Das said the subsidiary is in talks with several companies for financing and the mergers are expected to take place in the coming days.