India’s ReNew Power Plans To Raise $300 Million Through Rights Issue

One of India’s largest renewable energy generation companies plans to raise fresh equity funding through a rights issue.

Indian business daily Economic Times has reported, quoting unnamed sources, that ReNew Power Limited is planning to raise US$300 million through a rights issue. The company’s major investors — Goldman Sachs, Canada Pension Plan Investment Board, and Abu Dhabi Investment Authority — are expected to pump additional funds into the company.

The news report further stated that the company is looking to raise equity funding instead of debt funding through a bonds issue due to relatively poor response for risky debt assets. ReNew Power was assigned ‘BB-’ rating by S&P Global in February 2019, and explained potential risk areas that may result in ratings to be revised to a lower grade.

ReNew Power had filed for an Initial Public Offering (IPO) with the Securities and Exchange Board of India (SECI) last year. However, there has been no development regarding the issue since then. The company has reportedly scrapped plans to go ahead with the IPO for the moment and instead has come out with the rights issue.

Fresh funds raised from the rights issue are expected to be used to fund capacity expansion as well as repay debt that the company had raised to finance acquisitions of other renewable energy players in India. Bonds issued by a subsidiary worth Rs 1 billion (US$14.3 million) are set to mature in November this year while bonds worth Rs 8.5 billion (US$122 million) issued by ReNew Power itself are set to mature in November 2020.

ReNew Power had acquired Ostro Energy, another renewable energy IPP operational in India. CPPIB’s US$247 million investment has helped ReNew to complete this acquisition. ReNew Power absorbed the 1.1 gigawatt portfolio of Ostro Energy that enabled the former to amass a 7 gigawatt portfolio, the largest in India.

ReNew, which started with a focus in the wind energy sector, is now a dominant player in the solar power sector as well. The company has so far secured 2.1 gigawatts of wind energy capacity in the 12 auctions conducted in the country, representing a sector-leading share of 17%. The company also secured 120 megawatts of capacity in the recent solar-wind hybrid auction and has bid to develop 300 megawatts of capacity in the fourth national-level solar power auction. The company already operates a 300 megawatt solar power plant at one of the largest solar power parks in India.