Flood Of Renewable Energy IPOs Expected In India

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Some of the leading solar and wind energy generation companies in India are prepping for equity sale at bourses. A number of Initial Public Offerings (IPOs) are expected after a long spree of highly competitive tariff bids, both in the solar as well as wind energy sector.

Media reports state that Adani Green Energy, a subsidiary of Adani Enterprises, is expected to be cast out as a separate entity soon and then listed on Indian bourses. Adani Green Energy is one of the leading solar and wind energy developers in India and owns the largest solar power project in India. We first covered a story related to this development back in October 2017. 

Adani Enterprises also owns Mundra Solar PV, India’s largest solar cell and module manufacturer. While it is unclear if Mundra Solar PV will also be spun out as a separate entity, Adani may not move forward with its listing anytime soon. Mundra Solar PV has only recently started manufacturing cells and modules, and market conditions for domestic manufacturers are not at all conducive.

Another long-awaited IPO would come from India’s largest renewable energy developer — ReNew Power Ventures Limited. The company has been conducting regulatory formalities for its IPO for several months now. The company is now expected to launch the IPO very soon, possibly raising close to $1 billion. 

Acme Solar is another company that pops up frequently on the ‘upcoming IPOs’ radar. The company has filed a red herring prospectus twice in the last few months. Initially, it had planned to raise around Rs 2,200 crore ($335 million) to fund the cheapest solar power project in India. However, when the company was able to finance the project with internal resources, it decided to reduce the IPO size to Rs 1,000-1,500 crore (~$150-$225 million). Recently, the regulators objected to Acme’s valuations in the initial red herring prospectus and the fate of IPO now lies in limbo.

Mytrah Energy India Limited, a subsidiary of London Stock Exchange-listed Mytrah Energy Limited, is also believed to be looking at various options to raise capital from Indian bourses. Apart from a potential IPO, the company is looking at the option to launch an Infrastructure Investment Trust (InvIT). An InvIT would involve floating a company that owns physical assets (wind and solar power projects in Mytrah’s case) and offering equity share to investors. This would be akin to listing a yieldco.

Why now?

A number of reasons are likely behind this IPO spree in India. First is the favorable government policies. The central government has exempted renewable energy projects from transmission charges if they are commissioned by March 2022. It has also given a very busy and aggressive timeline for auctions of wind and solar power projects. At the end of March 2018, India’s wind and solar power capacity stood at just over 55 gigawatts with a target of 160 gigawatts by March 2022. All auctions are expected to be completed by March 2020. Thus, all developers would like to cash-in on the opportunity to raise money from the stock market before the incentives expire and when they actually need funding the most.

Second, India has matured as a renewable energy market over the last couple of years. Several of the companies that are planning IPOs have either acquired other smaller companies or are planning to do so. IPOs seem an efficient way to fund these acquisitions.

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An avid follower of latest developments in the Indian renewable energy sector.

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