IREDA eyes FPO to raise capital for green energy projects

State-run Indian Renewable Energy Development Agency (IREDA) is planning a follow-on public offer (FPO) in the current financial year to meet its capital requirement and for lending to green energy projects.

State-run Indian Renewable Energy Development Agency (IREDA) is planning a follow-on public offer (FPO) in the current financial year to meet its capital requirement and for lending to green energy projects.

Besides, the non-banking financial company (NBFC) will also take the perpetual loan route to raise funds. Last year in November, the green energy sector lender raised ₹2,150 crore through an initial public offering (IPO) that was oversubscribed about 39 times.

Speaking to reporters, IREDA Chairman and Managing Director Pradip Kumar Das said the plan is to float a FPO to raise funds for renewable energy projects as the borrowing plan of ₹24,200 crore for FY25 would not be adequate.

Also read: IREDA incorporates subsidiary in GIFT City, GujaratExplaining the dynamics, he said that generally the months of September to November and February are best suited for raising capital. After the new government takes charge at the centre, by July 6, 2024, the company will begin the approval process, which could take 4-6 months. He did not specify the amount that IREDA plans to raise. The proposal will require Union Cabinet approval.

The lender is eyeing the second half of the current financial year or H1 FY26 for the FPO.

Das emphasised that IREDA, which has been in the renewables space for almost 4 decades, will see an increase in loan disbursements in FY25 which will require more finances to be raised. Loan disbursements are expected to increase during the current fiscal year in view of the government’s push for renewable energy projects in the country.

Also read: IREDA sanctions record ₹37,354-cr loans in FY24As on date, IREDA’s net worth is around ₹8,559.43 crore and the loan book is around ₹59,698 crore. In FY24, the company disbursed around ₹25,089 crore. In FY23, it was around ₹21,639 crore and ₹16,071 crore and around ₹11,000 crore in FY22 and FY21, respectively, he added.

He stressed that there is an urgent need to work on Green Taxonomy. Previously, he has said that green taxonomy can help raise around ₹25 lakh crore for green energy projects by 2030.

Das said the company will soon be listed for issuing bonds eligible for exemption under Section 54EC of Income Tax Act.

Section 54EC bonds, also known as capital gain bonds, are fixed income instruments that provide capital gains tax exemption under Section 54EC to investors. At present, REC, PEC, National Highway Authority of India and Indian Railway Finance Corporation can issue bonds under Section 54EC.

IREDA has incorporated a wholly owned subsidiary at the International Financial Services Centre (IFSC) in GIFT City, Gujarat, IREDA Global Green Energy Finance IFSC. It will act as an offshore platform for securing competitive funding and will help save hedging costs.

Das said that this is anticipated to unlock fresh business prospects and establish its global footprint in the renewable energy sector. This strategic step is in line with IREDA’s vision of facilitating sustainable development through renewable energy investments, both domestically and internationally.

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