Indian Renewable Energy Developers Drop IPOs, Plan Yieldcos
Faced with uncertain funding environment, falling tariff rates, and an unpredictable revenue stream from buyers, Indian developers have backtracked plans to launch initial public offerings.
According to media reports, ReNew Power Limited, one of India’s largest renewable energy developers, has joined Acme Cleantech and Mytrah Energy to scrap plans for an IPO. The company is now looking at alternate means to raise funding, including asset sale, bonds, and equity sale to private investors. 
ReNew Power is reportedly considering setting up an infrastructure investment trust which is analogous to a yieldco that has become quite popular in the developed markets few years back. The company could sell some of its 4 gigawatt operation assets to interested buyers. These buyers could then place these assets into an infrastructure investment trust. ReNew shall remain responsible for the operation and maintenance of these assets while the investors shall reap dividends from the revenue generated from power supplied by these power plants.
Competitor Acme Cleantech, which had also filed for an IPO with the Securities and Exchange Board of India (SEBI), has not made any progress on entering the Indian bourses in several months. In October last year it was reported that the company was planning to sell 650 megawatts of operational assets in order to fund future project development.
The company is also reportedly planning to raise Rs 3,000 crore (~US$430 million) by placing some power plants in an infrastructure investment trust. Acme holds the record for the lowest solar PV bid in India. The company has won a very large capacity at the tariff rate of Rs 2.44/kWh (3.52¢/kWh). In the last few major solar power auctions the company has not been a participant, indicating the challenges it is currently facing.
Another independent power producer in the renewable energy market, Mytrah Energy, is looking to sell its assets. The company was listed at the Alternate Investment Market of the London Stock Exchange in 2010. The company de-listed its shares from AIM in 2018 with plans for a fresh listing at Indian bourses. However, no progress was made in that regard either.
Indian renewable energy companies are facing collateral damage as several large assets in the conventional power sector becoming defunct due to falling demand and inability to service debt. They have tried other ways to raise funds with several companies issuing green bonds to access debt at much cheaper rates. However, these funds are not always well-rated by credit rating agencies.
Among investors, the Piramal Enterprises and the Canada Pension Plan Investment Board (CPPIB) are reportedly scouting for renewable energy assets to invest US$600 million to set up an infrastructure investment trust.
It, however, remains doubtful how much success the renewable energy infrastructure investment trusts in India would reap. Indian power distribution utilities are infamous for delay in payments to project developers which remains one of the biggest hurdles for developers to access predictable cash flow.
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