Government of India-owned IREDA’s initial public offer (IPO) was greeted with a positive response from various types of investors on the first day of the issue. The issue, which is set to close on November 23, has fixed a price band of ₹30-32 per share.
The IPO was subscribed 1.96 times the shares on offer on the first day, with the entire ₹2,150 crore issue being fully subscribed all classes of investors the end of Tuesday. The non-institutional investor portion was subscribed 2.7 times, while the qualified institutional buyer (QIBs) portion was subscribed 1.3 times.
Prior to the IPO, the company raised ₹643 crore from anchor investors such as SBI Banking & Financial Services Fund, HDFC Mutual Fund, and ICICI Prudential PSU Equity Fund. The table below shows the subscription rates for different types of investors.
Type of investor No of times subscribed
Qualified Institutional Buyers 1.34
Non-institutional Investors 2.73
Retail 1.97
Total 1.96
Source: BSE
IREDA, with over 36 years of experience in the promotion, development, and extension of financial assistance for new and renewable energy projects, also serves energy efficiency and conservation projects. The PFI intends to use the net proceeds from the fresh issue to augment its capital base to meet future capital requirements and onward lending.
As of September 30, 2023, IREDA had a diversified portfolio of term loan outstanding amounting to ₹47,514 crore. Its revenue from operations grew 24% in FY23, with net profit also growing 36% during the same period. Its capital to risk-weighted asset ratio (CRAR) stood at 18.8% for FY23, while its gross non-performing assets (NPA) stood at 3.21% the end of FY23.
The company’s finances are indirectly linked to that of state electricity distribution companies or discoms. Delays in payments to renewable energy projects that they finance may occur due to the poor health of state discoms. Certain discoms that purchase electricity from its borrowers sought revision in the terms of their existing power purchase agreements (PPAs), which could negatively affect its borrowers, impacting their repayment capabilities.
With its IPO closing on November 23, IREDA is pressing forward with its plans to utilize the net proceeds from the offering to advance its mission of promoting and financing renewable energy and energy efficiency projects. Investors have the opportunity to bid for a minimum of 460 shares and in multiples of 460 thereafter.