State-owned Indian Renewable Energy Development Agency (IREDA) plans to issue a follow-on public offer (FPO) to raise equity capital and fund renewable energy projects, aiming to raise Rs. 24,200 crore in FY25.
In a media discussion on May 21, 2024, Pradip Kumar Das, Chairman and Managing Director of IREDA, said the company would require more equity capital as the project size in green energy is getting bigger, and the company intends to support the sector’s growth.
Das also said that raising debt is not a problem for IREDA but it believes that an FPO would be a more suitable route to raise more equity capital. He further explained that months from September to November and February are typically the most favorable for raising capital.
With a new government expected to take charge by June 6, 2024, IREDA plans to start the approval process for the FPO soon after, which is expected to take four to six months.
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Additionally, the non-banking financial company (NBFC) will explore raising funds through perpetual debt instruments.
This strategy follows the company’s successful initial public offering (IPO) last December, which raised Rs. 2,150 crore and was oversubscribed nearly 39 times. Unfortunately, IREDA’s IPO attempts in 2017 and 2019 were not successful.
Das also mentioned that the company has asked the government to include it in the capital gains exemption bond under Section 54EC of the Income Tax Act, 1961, similar to other state-owned energy sector NBFCs like PFC and REC.
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Das said there is a lot of potential in the Indian bond market that can be tapped. MNRE will also write to the finance ministry requesting our inclusion. IREDA is a 100% green company and well suited for 54EC.
Additionally, IREDA has established a wholly-owned subsidiary at the International Financial Services Centre (IFSC) in GIFT City, Gujarat, called IREDA Global Green Energy Finance IFSC. This subsidiary will serve as an offshore platform to secure competitive funding and reduce hedging costs.
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Das mentioned that the branch would focus on green energy sectors with export potential, as the company aims to expand into foreign currency lending.
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