The first initial public offering (IPO) in India from the booming renewable energy sector is here.
ReNew Power, India’s largest renewable energy producer, is looking to raise Rs2,600 crore ($390 million) through its first public share sale. The move comes just a month after ReNew sealed India’s biggest renewable energy deal when it acquired New Delhi-based Ostro Energy for around $1.5 billion.
The company intends to utilise the funds from the share sale to acquire companies and repay loans of certain subsidiaries, among other things. The IPO will comprise a fresh issue of shares worth Rs 2,600 crore, while existing shareholders, including Global Environment Fund, Green Rock Energy and GS Wyvern Holdings, an investment arm of Goldman Sachs, will sell some of their equity.
Founded by Sumant Sinha, a former Wall Street banker, ReNew currently has an installed capacity of over 5,800 megawatts (MW) across wind and solar power plants. The seven-year-old company is backed by Goldmans Sachs, Abu Dhabi Investment Authority, Canada Pension Plan Investment Board, among other investors, and is valued at around $2 billion.
While New Delhi-based solar power producer Azure Power went public in 2016 and listed on the New York Stock Exchange, ReNew’s will be the first public issue by a homegrown clean energy company on the Indian bourses.
Public issues like these will also help the Narendra Modi government’s push towards its ambitious target of 175,000 megawatts of renewable power capacity by 2022. “This will provide much-needed fillip especially (because) the public sector banks are refraining from providing debt financing. People are now relying on foreign funds for their equity financing but if this is a positive, it will open up one more door,” Ankur Agarwal, a senior analyst with India Ratings and Research who tracks the infrastructure sector, told Quartz.
The success or failure of ReNew Power’s IPO will also be a benchmark for the rest of the sector.
“(The) renewables sector has reached an inflection point now,” said Amit Kumar, a partner at consulting firm PwC, who focuses on the clean energy sector. The Indian renewables sector is beginning to see consolidation, with a handful of companies such as ReNew, Hero Future Energies, and GreenKo acquiring smaller power projects to own bigger chunks of the market rather than multiple players owning small assets, he explained. As a result, such companies have now reached a stage when they have the scale of operations required to tap the equity market for financing.
A successful IPO from ReNew could give other Indian renewable energy players the confidence to raise funds from the Indian market, Kumar added.
A few Indian companies already seem to have their IPO plans in place. For instance, in February this year, the Indian subsidiary of Singapore-based Sembcorp Industries, which owns both thermal and renewable energy assets in India, filed for an IPO. Solar power company ACME Solar Holdings, too, reportedly plans to file for an IPO later this year.