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Salient features of the IPO:

• Indian Renewable Energy Development Agency Ltd. (IREDA) an infrastructure finance company, which provides financial assistance to renewable energy (RE) projects and energy efficiency & conservation (EEC) projects, is coming up with an IPO to raise around Rs. 2,150cr, which opens on 21st Nov. and closes on 23rd Nov. 2023. The price band is Rs. 30 - 32 per share.

• The IPO is a combination of fresh and OFS issue. The company will not receive any funds from the OFS portion. However, the fresh issue net proceeds will be used to augment the capital base of the company.

• Government (its promoter) is participating in the OFS and offloading 26.878cr shares. Post-IPO, the government’s stake will decline to 75%, compared to current 100%. Consequently, public stake will increase from nil to 25%

Key competitive strengths:

• Track record of growth, geared towards high quality assets and diversified asset book and stable profitability

• Strategic role in Government of India’s initiatives in the RE sector

• Established & trusted brand name operating in a rapidly expanding sector

• Digitized process for borrower centricity and operational scalability, with presence across India

• Comprehensive data-based credit appraisal process & risk-based pricing, with efficient post-disbursement project monitoring & recovery process

• Access to diversified and cost-effective long-term sources of borrowing with a judicious approach towards asset-liability management

• Experienced senior management with in-depth sector expertise and professionally qualified employee base

Risk and concerns:

• General slowdown in the global economic activities

• Unfavorable government policies & regulations

• Rise/volatility in interest rates

• Unexpected rise in stressed assets

• Difficulty in maintaining the profitability

• Competition

Below are the key highlights of the company:

• Established in 1987, IREDA is the largest pure-play green financing NBFC in India. It was incorporated with an objective to provide innovative financing in RE, EEC and environmental technologies. In the past 36 years, the company has financed projects across multiple RE sectors such as solar power, wind power, hydro power, transmission, biomass including bagasse & industrial co-generation, waste-to-energy, ethanol, compressed biogas, EEC and green-mobility. It also offers financial products and schemes for new and emerging RE technologies such as, biofuel, green hydrogen, battery energy storage systems, fuel cells and hybrid RE projects.

• IREDA is wholly owned Government of India enterprise under the administrative control of the Ministry of New and Renewable Energy (MNRE). It is notified as a “Public Financial Institution” and is registered with the Reserve Bank of India as a systemically important non-deposittaking NBFC with Infrastructure Finance Company status. In Jun. 2015, the company was conferred with the Mini-Ratna (Category I) status by the government.

• IREDA is a nodal agency for MNRE schemes such as Central Public Sector Undertaking Scheme, Phase-II (Government Producer Scheme); National Bioenergy Program; National Programme on High Efficiency Solar PV Modules under PLI scheme, Tranche-I; and Generation-Based Incentive Scheme.

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