The renewable energy sector in India is poised for significant growth in the coming years, driven by ambitious capacity addition targets to ensure energy security and meet climate commitments. To finance the rapid expansion of solar, wind and green hydrogen projects, companies are actively leveraging public markets through initial public offerings (IPOs), qualified institutional placements (QIPs), infrastructure investment trusts (InvITs) and overseas bond issuances. According to EY’s Global IPO trends report, 2023 witnessed a record 48 per cent year-on-year increase in IPO fundraising by Indian companies. Over 220 IPO deals successfully raised $6.9 billion, setting the stage for accelerated activity in 2024.
The renewable energy sector also witnessed some momentum in fundraising. Renewable Watch presents a review of companies that raised capital through the public route in the past year…
IREDA
Listed on November 29, 2023, the Indian Renewable Energy Development Agency (IREDA) had an issue price of Rs 32 per share. As of January 22, 2024, it is trading at Rs 123, demonstrating a remarkable increase of 285 per cent. The company aims to utilise the net proceeds to augment its capital base, meet future capital requirements and for onward lending. In addition, the funds will be allocated to enhance the brand image among existing and potential customers, as well as to create a public market for the equity shares in India.
Oriana Power Limited
Oriana Power Limited, a solar engineering, procurement and construction (EPC) firm headquartered in Uttar Pradesh, issued an IPO in August 2023 with an issue price band of Rs 115-Rs 118 per share. As on January 22, 2024 with its shares trading at Rs 567, the company has witnessed a substantial increase of 381 per cent. The proceeds from the IPO have been earmarked for meeting working capital requirements, making investments in subsidiaries, funding infrastructural capital expenditure as well as other general corporate requirements.
Suzlon Energy
Suzlon Energy, one of the largest wind turbine manufacturers and independent power producers in India, has undergone multiple rounds of debt restructuring and QIPs. The company successfully reduced its debt obligations from over Rs 130 billion to approximately Rs 18 billion. In a recent QIP issued in August 2023, Suzlon Energy successfully raised Rs 20 billion, and reported a debt-free balance sheet after paying off Rs 18 billion in loan obligations. As a result, the company’s profits in the second quarter of financial year 2024 witnessed a 45 per cent year-on-year increase, attributed to a decrease in financing costs.
IndiGrid
Established in 2016, IndiGrid is India’s first and largest InvIT in the power transmission sector. IndiGrid owns operates and manages power transmission networks and renewable energy assets throughout India. The company raised Rs 6.7 billion in December 2023 through an institutional placement process, following an earlier fundraising of over Rs 4 billion through a preferential issue in September 2023. The proceeds from both fundraising activities are intended for debt reduction, as reported by the company statement.
Sterling and Wilson Renewable Energy Limited
A leading solar EPC player, Sterling and Wilson Renewable Energy Limited raised Rs 15 billion through a QIP in mid-December. The company plans to utilise the majority of the proceeds to reduce debt, providing the necessary capital to tap into the rapidly growing solar EPC markets in India and abroad. The QIP witnessed a strong response from both domestic mutual funds and global foreign institutional investors. As of September 30, 2023, the company’s unexecuted order book remained healthy at Rs 68.35 billion, driven by strong domestic EPC order inflows and a growing bid pipeline both in India and abroad.
KPI Green Energy
Gujarat-based IPP, KPI Green Energy has 900 MW of operational assets. In December 2023, the company raised Rs 3 billion through a QIP. The proceeds are earmarked for funding a 240 MW project awarded by GUVNL and servicing its debt obligations. KPI Green Energy currently has an order pipeline of more than 750 MW of projects, indicating positive growth prospects.
Inox Wind Energy Limited
Inox Wind Energy Limited is a turnkey wind solutions provider and equipment manufacturer with a cumulative manufacturing capacity of 1,600 MW. In October 2023, the company completed a successful fundraising of Rs 8 billion through an equity share sale of its subsidiary, Inox Wind Limited. The company used the funds to fulfil its loan obligations, declaring itself net debt-free in November 2023.
Upcoming IPOs
Waaree Energies Limited
Founded in 1989, Waaree Energies Limited, a key player in the Indian solar module manufacturing segment, filed for an IPO in December 2023. The IPO includes a fresh issue offering equity shares aggregating up to Rs 30 billion and an offer for sale (OFS) of up to 3.2 million shares, as outlined in the draft red herring prospectus (DRHP) document. As of November 2023, Waaree Energies has a substantial order book, with pending orders for solar photovoltaic modules totalling 20.16 GW. The funds raised from the IPO will be utilised for setting up a 6 GW ingot wafer, solar cell and solar photovoltaic module manufacturing facility in Odisha, along with meeting general corporate requirements.
Vikram Solar Limited
Vikram Solar, one of the largest solar panel manufacturers and EPC providers in India, filed its DRHP for IPO in March 2022. The Securities and Exchange Board of India granted approval in August 2022. The IPO comprises a fresh issue of equity shares worth up to Rs 15 billion and an OFS of 5 million equity shares. With the net proceeds from the IPO, Vikram Solar Limited plans to establish a new 2 GW facility in Tamil Nadu, with the remaining funds allocated to fulfil other corporate requirements. As of January 2024, the final red herring prospectus and offer documents remain pending.
Alpex Solar
Headquartered in Greater Noida, Alpex Solar is a solar panel manufacturing company with an annual manufacturing capacity of 450 MW. The company plans to use the net proceeds from its upcoming IPO to expand its PV panel capacity from 450 MW to 1.2 GW and set up an aluminium frame manufacturing unit. Alpex Solar recently filed a DRHP with the NSE, aiming to issue 6,480,000 equity shares for Rs 10 each.
Outlook
The fundraising outlook for renewable energy companies in 2024 remains robust, driven by several key factors such as the ambitious renewable energy target of 500 GW by 2030, necessitating an investment of nearly $300 billion according to the National Electricity Plan. The industry will benefit from a strong project pipeline, comprising over 50 GW of solar and 20 GW of wind projects. In addition, there is a growing interest from foreign direct investment (FDI) and institutional investors in environmental, social and governance (ESG) assets. The support extends to domestic solar manufacturing through production-linked incentives, while new segments such as offshore wind and green hydrogen are expected to pick up. The presence of favourable policies, including 100 per cent FDI allowed through the automatic route, further enhances market access.
In conclusion, the recent trend of capital raising in the Indian renewable energy sector, particularly through public offerings, reflects the dynamism and growth potential of the industry. Companies operating in the solar, wind and infrastructure segments have effectively utilised capital markets to fund their expansion, settle debts and pursue strategic initiatives. The positive performance of several IPOs and rights issues is a positive growth signal, underscoring the high level of investor confidence in the renewable energy sector.
