IREDA IPO opens on November 21
The Indian Renewable Energy Development Agency (IREDA), a public sector enterprise, is set to open its maiden public issue for subscription on November 21. This marks the fourth initial public offering (IPO) in the current month, following ESAF Small Finance Bank, Protean eGov Technologies, and ASK Automotive.
The anchor book for the IPO is scheduled to be launched for a day on November 20, and the subscription period will close on November 23. The specific price band for the offer is expected to be announced later in the week.
IREDA’s IPO is a significant move for the renewable energy sector, reflecting the growing interest and investment in sustainable and clean energy initiatives in India. Investors will likely scrutinize the details of the IPO, including the price band, to assess the potential and attractiveness of investing in IREDA, a key player in the country’s renewable energy landscape.
The Indian Renewable Energy Development Agency (IREDA) IPO consists of a total of 67.19 crore shares. This includes a fresh issue of 40.32 crore equity shares by the company and an offer-for-sale of 26.88 crore shares by the Government of India. Additionally, 18.75 lakh equity shares have been reserved for the company’s employees.
The IPO, excluding the employee portion, represents the net issue available for subscription. Investors will have the opportunity to subscribe to the fresh issue, and the offer-for-sale provides an avenue for the government to divest its stake in IREDA. The details of the IPO, including the pricing, will be crucial factors influencing investor participation and the overall success of the offering.
The allocation of the net issue size in the IREDA IPO is structured to cater to different investor categories. Specifically:
1. Qualified Institutional Buyers (QIBs): Half of the net issue size is reserved for qualified institutional buyers, reflecting a significant portion allocated for institutional participation.
2. High Net Worth Individuals (HNIs): 15% of the net issue size is earmarked for high net worth individuals, providing a share for individual investors with larger financial capacities.
3. Retail Investors: The remaining 35% of the net issue size is set aside for retail investors, making it more accessible for individual investors with smaller investment amounts.
IREDA, as an infrastructure finance company, plays a crucial role in providing financial assistance for new and renewable energy (RE) projects, as well as energy efficiency and conservation (EEC) projects. The reserved portions for different investor categories aim to ensure a diverse and widespread participation in the IPO, aligning with regulatory guidelines and fostering a broad investor base.
The net fresh issue proceeds from the IREDA IPO will primarily be utilized by the state-owned company to augment its capital base, meeting future capital requirements and facilitating onward lending activities. As a government-owned Non-Banking Financial Company (NBFC), IREDA is obligated to maintain a Capital to Risk Weighted Asset Ratio (CRAR) of 15 percent.
With over 36 years of experience in providing financial assistance for new and renewable energy projects, as well as energy efficiency and conservation projects, IREDA has demonstrated robust financial performance. The institution recorded an impressive 58 percent Compound Annual Growth Rate (CAGR) in net profit during the financial years 2021 to 2023. In FY23, it reported a profit of Rs 864.63 crore, and in the first quarter of FY24, the profit stood at Rs 294.6 crore. This financial performance indicates the institution’s sustained growth and financial stability, which may be factors influencing investor interest in its IPO.
The timeline for the IREDA IPO is structured with several key milestones:
IREDA is scheduled to finalize the basis of allotment for IPO shares by November 28, a crucial step that determines the allocation of shares among various investor categories.
Successful investors can anticipate the equity shares to be credited to their demat accounts by November 29, marking the completion of the allotment process.
The commencement of trading in IREDA’s equity shares is set for December 1. This timeline follows a T+6 schedule, counting from the closing date of the IPO.
IDBI Capital Markets & Securities, BOB Capital Markets, and SBI Capital Markets are the appointed merchant bankers overseeing the IPO process. Additionally, Link Intime India serves as the registrar to the offer, managing the administrative aspects of the IPO.
Market participants and investors will closely monitor these developments as the IREDA IPO progresses through these significant milestones in the upcoming weeks.
