Equity markets and domestic investors are optimistic about India’s renewable energy story being sold by the central government. As a result, the first initial public offering by a core renewable energy company has received a massive response, with Inox Wind raising $2.2 billion.
Inox Wind had offered to sell 23.2 million shares through IPO to raise about $117 million, but received bids for 431 million shares worth $2.2 billion. Inox is a wind energy developer with some integrated manufacturing capabilities. The company is backed by Gujarat Fluorochemicals Limited that produces industrial chemicals, including refrigerants.
The IPO was opened less than a month after the government announced a fresh target for the wind energy sector. India aims to have installed wind energy capacity of 60 GW by 2022, about 3 times the current installed capacity.
Suzlon Energy, India’s largest wind energy solutions provider, is the only wind energy company current listed on the India’s bourses. The company has been reeling under significant debt for several quarters now but has benefitted from the changed policy environment. Inox Wind has offered investors shares at about $5 a piece while shares of Suzlon Energy are trading at around $0.5 a piece.
The funds raised from the IPO are expected to be used for financing the manufacturing capacity enhancement. Inox currently has manufacturing of 800 MW and plans to double it soon. Some of the funds are also expected to be invested into large-scale wind energy project announced recently by the company. 700 MW capacity is expected to be commissioned in the western state of Gujarat on the near future for which would require a total investment of $750 million.
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