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IREDA Announces Up to Rs 4,500 Crore Equity Capital Raise

IREDA Announces Up to Rs 4,500 Crore Equity Capital Raise

IREDA Announces Up to Rs 4,500 Crore Equity Capital Raise

IREDA, a leading public sector green financier, plans to raise up to Rs 4,500 crore in equity capital to support India’s renewable energy goals. This decision was made during a meeting of IREDA’s Board of Directors held on August 29, 2024, as the company seeks to bolster its financial capabilities and support India’s ambitious renewable energy goals.

As a mini-Ratna company under the administrative control of the Ministry of New and Renewable Energy, IREDA has played a crucial role in financing green energy projects across the country. The funds raised through this equity capital infusion will be used to expand IREDA’s on-lending activities, enabling it to provide financial support to a broader range of renewable energy projects, from inception to post-completion.

The planned fundraising will be executed in one or more tranches, utilizing various methods such as a Further Public Offer (FPO), Qualified Institutional Placement (QIP), Rights Issue, Preferential Issue, or other permitted modes. The exact number of securities to be issued will be determined at a later stage, based on market conditions and the company’s funding requirements.

IREDA’s decision to explore diverse funding avenues, including public and institutional channels, demonstrates its commitment to diversifying its sources of capital. This strategic move will not only strengthen the company’s financial position but also enable it to cater to the evolving needs of the renewable energy sector in India.

The proposed fundraising initiative requires approval from the Government of India and other relevant regulatory authorities. This process is crucial, as the additional capital will play a pivotal role in supporting India’s ambitious renewable energy targets. The country aims to achieve 500 GW of renewable energy capacity by 2030, which requires an annual addition of approximately 50 GW to the existing infrastructure.

IREDA’s financial performance in the recent past has been commendable, further underscoring the need for this capital infusion. During the June quarter of 2024, the company saw a significant boost in its financial performance, with a 30% surge in net profit reaching Rs 384 crore, accompanied by a 32% year-over-year increase in revenue, which stood at Rs 1,502 crore. This robust financial standing has inspired the company’s leadership to seek additional resources to fuel its continued growth and contribute to the nation’s renewable energy aspirations.

The Indian government’s focus on renewable energy, as evidenced by policies such as the National Renewable Energy Policy and the National Solar Mission, has been a driving force behind the sector’s expansion. IREDA’s role as a leading financier in this space has been instrumental in facilitating the implementation of these policies and supporting India’s transition towards a more sustainable energy future.

The proposed fundraising by IREDA is expected to have a positive impact on the renewable energy industry in India. By providing access to additional capital, IREDA will be able to expand its lending activities and support a greater number of projects across the country. This, in turn, will contribute to the overall growth and development of the renewable energy sector, helping India progress towards its ambitious targets and reduce its reliance on fossil fuels.

Furthermore, this strategic move aligns with the global efforts to combat climate change, as the increased funding for renewable energy projects will play a crucial role in reducing greenhouse gas emissions and promoting a more environmentally sustainable energy landscape.

Overall, IREDA’s decision to raise equity capital of up to Rs 4,500 crore is a significant development that underscores the company’s commitment to supporting India’s renewable energy ambitions. By diversifying its funding sources and strengthening its financial capabilities, IREDA is poised to play an even more pivotal role in driving the country’s transition towards a greener and more sustainable energy future.

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