Cabinet approves IPO of IREDA

New Delhi: The Union cabinet approved the IPO of Indian Renewable Energy Development Agency (IREDA), which is expected to enable the state-run entity to raise funds for clean energy projects.
The government has said all public sector companies that have been earning profit for three years should be listed and has put in place a timeline to unlock value in state-run companies.IREDA will issue fresh 14 crore shares, increasing the paid up share capital of the company from Rs 784 crore to Rs 923 crore.
The cabinet also approved the issue of shares to retail investors and IREDA employees at a discount of 5% on the issue price of each equity share on book-building basis, with cap of 0.5% on equity after issue for PSU workers, and the allocation to retail investors in the net offer will not be less than 35%, as per regulations.
However, the number of shares proposed to be issued to employees and retail investors will be finalized in consultation with the lead managers in line with Sebi regulations
The public issue of equity will enable IREDA to increase its equity base which will help them raise more debt resources for funding renewable energy projects.
“It will also enable it to unlock its true value and increase its visibility in domestic and international financial markets. IREDA, being the premier institution for the renewable energy sector, will be required to raise equity funds to leverage loan financing,” said a government statement.
IREDA has to cater to the increasing needs of the sector to sustain its contribution to the segment. The government has scaled-up the renewable energy targets to 175 gigawatts by 2022. To achieve this ambitious target, substantial investments in the renewable energy sector will be needed.
IREDA is a public financial institution set up in March, 1987 under the Company’s Act, 1956. IREDA is registered as non-banking financial company with the Reserve Bank of India.
IREDA has primarily worked with the private sector enterprises operating in the power sector. For the last three decades, IREDA has been supporting establishment of renewable energy projects and has greatly succeeded in commercialization of sustainable energy technologies in the country.
The government has set an ambitious disinvestment target of Rs 72,500 crore for 2017-18, including sale of stake in five general insurance companies as well as strategic sales.
Listing is one of the options for companies to raise fresh equity as well as for the government to cut stake and share the wealth with the public. Mergers and acquisition is also being looked at in the PSU space.