Indian Renewable Energy Development Agency Seeks Stake Sale Approval

Mumbai: The state-owned Indian Renewable Energy Development Agency (Ireda) is on the move! They have requested the government’s nod to sell up to 10% of their stake as part of an exciting plan to raise around ₹4,500 crore in equity to fuel their growth ambitions.

Seeking Government Approval

Chairman and Managing Director Pradip Kumar Das shared, “We are seeking the Government of India’s approval for allowing natural dilution of their stake by up to 10%. The government will have the final say, but with the sector’s expectations and our equity needs, we’re optimistic about hitting our ₹4,500 crore target by January-February.”

Maintaining Strong Financial Indicators

Das emphasized the importance of ensuring a strong loan book and a solid capital to risk-weighted assets ratio (CRAR), which currently stands around 20%. “It’s crucial to maintain a CRAR of 17-18% to secure a healthy, stable AAA rating moving forward,” he stated during the Financing 3.0 Summit organized by the Confederation of Indian Industry (CII).

Current Stake and Future Projections

Currently, the government holds a 75% stake in Ireda. Das mentioned, “The final percentage they are willing to allow us will be communicated soon. We’re in the advanced stages of this process, so we hope to hear back within a couple of weeks.”

Market Performance

On Monday, Ireda’s stock closed down by 1%, settling at ₹239.10 on the National Stock Exchange.

International Credit Rating Achieved

Adding to their accolades, Ireda recently received an international credit rating from S&P Global Ratings, which has assigned them a long-term rating of ‘BBB-‘ and a short-term issuer rating of ‘A-3’, with a stable outlook.

Funding Strategies Ahead

With these ratings in hand, Ireda is preparing to tap into international markets to lower its borrowing costs. Das detailed, “We anticipate borrowing around ₹25,000 crore from debt markets and ₹4,500 crore from equity markets. We’re exploring various options to secure ‘cheap money’ from overseas, including development finance institutions and multilateral organizations.”

Exciting Developments at GIFT City

Exciting news on the horizon! Ireda is also gearing up to launch its operations at the GIFT City branch, which will bolster their capacity to attract overseas funding. “We are still waiting for permission to kick off operations. Once we have it, we aim to raise funds through various types of bonds, including social bonds, sustainability-linked debt, and green financing,” Das mentioned.

Potential Tax Exemptions

Furthermore, Das has revealed efforts to be included in the list of companies eligible for tax exemptions under Section 54EC of the Income Tax Act, 1961. This section allows for deductions on long-term capital gains of up to ₹50 lakh through capital gains bonds issued by other lenders.

“We are targeting 54EC. What is available to others should be extended to us—it’s quite feasible. The government has already outlined this provision, and we are currently in the process of getting added to the list,” Das concluded.