"The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, has given its approval to issue 13,90,00,000 fresh equity shares of Indian Renewable Energy Development Agency (IREDA) of Rs 10 each to the public on book-building basis through the IPO (initial public offer)," an official statement said.
The listing of IREDA is expected to increase the paid-up share capital of the company from Rs 784 crore to Rs 923 crore. At present, the company has 78.46 crore equity shares.
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The CCEA approval is significant because IREDA has plans to disburse Rs 13,000 crore for clean energy projects this fiscal and is vying for around 20 per cent of the loan market share for such projects.
With the government aiming to add around 15 to 16 GW of clean energy projects, including solar and wind, there would be total credit market size of around Rs 65,000 crore this fiscal.
IREDA has sanctioned around Rs 37,000 crore of credit for clean energy projects in the country so far and has released around Rs 28,000 crore to developers, which aids generation capacity of around 7,000 MW.
According to the statement, the CCEA also approved issuance of shares to retail investors and IREDA employees at a discount of 5 per cent on the issue price of each equity share on book-building basis with a cap of 0.5 per cent on equity post issue for CPSE employees and the allocation to retail investors in the net offer will not be less than 35 per cent, as per the ICDR, 2009.
However, it said the number of shares proposed to be issued to employees and retail investors will be finalised in consultation with the lead managers and as per the SEBI regulations.
The CCEA also gave approval to conduct book building process for the IPO by the Ministry of New and Renewable Energy/IREDA through Book Running Lead Manager (BRLM) as per the guidelines of Department of Investment and Public Asset Management (DIPAM) and as per guidance of the Inter- Ministerial Group.
It said the IPO will enable the IREDA to increase its equity base, which will help it raise more debt resources for funding RE projects.
Such public issue will also enable it to unlock its true value and increase its visibility in domestic and international financial markets.
IREDA, being the premier institution for Renewable Energy (RE) Sector, will be required to raise equity funds to leverage loan financing for RE Sector.
IREDA has to cater to the increasing needs of the sector to sustain its contribution to the RE Sector. India has scaled up the RE targets to 175 GW by the year 2022.
Substantial investments in RE sector will be required to achieve this ambitious target.
IREDA is a Public Financial Institution established in March 1987 under the Company's Act, 1956. It is registered as a Non-Banking Financial Company with the Reserve Bank of India.
Since its inception, IREDA has played a pioneering role in supporting and facilitating the policies and programme of the Ministry of New and Renewable Energy (MNRE) that has nurtured the renewable energy industry in the country.
IREDA has primarily worked with the private sector enterprises operating in the power sector. For the last three decades, IREDA has been supporting establishment of renewable energy projects and has greatly succeeded in commercialisation of sustainable energy technologies in the country.