Ireda seeks govt nod to sell up to 10% stake, to raise ₹4,500 crore to fund growth

Mumbai: State-owned Indian Renewable Energy Development Agency (Ireda) has sought government approval to sell up to 10% stake, as the non-bank lender aims to raise about ₹4,500 crore in equity to fund growth.

“We are seeking the Government of India’s approval for allowing natural dilution of their stake by up to 10%. The government will take a final call on that, but we are confident because the kind of equity requirement we have, and what the sector expects from us, we have initially estimated ₹4,500 crore by January-February,” said chairman and managing director Pradip Kumar Das.

“This is in order to ensure that we have a fair amount of loan book as well as CRAR (capital to risk weighted assets ratio), which is very important. Currently, CRAR is around 20% and we have to ensure 17-18% CRAR in order to have a healthy, stable AAA rating in the time to come,” Das said at the Financing 3.0 Summit organised by industry body Confederation of Indian Industry (CII).

Domestically, Ireda is rated 'AAA' by most major credit rating agencies, including ICRA, India Ratings and CARE Ratings.

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“Right now, it (government stake in Ireda) is 75%, the final percentage they allow, they will communicate to us. The process is in advanced stages so maybe within a couple of weeks we will get the final news on that,” he added at the sidelines of the event.

Ireda stock closed 1% lower at ₹239.10 on the National Stock Exchange on Monday.

Last week, Ireda secured its international credit rating from S&P Global Ratings, which assigned it a long-term rating of 'BBB-' and short-term issuer rating of 'A-3', with a ‘stable’ outlook.

Das said that with the ratings now in place, the non-bank renewable energy lender will tap overseas markets to raise funds to bring down the borrowing cost.

“Our borrowing from the debt market is going to be around ₹25,000 crore, and from equity market around ₹4,500 crore,” Das said, adding that the company is exploring multiple options and will raise funds wherever its gets “cheap money from overseas”, including development finance institutions and multilateral organisations.

Ireda is also waiting to commence operations at its GIFT City branch, which will help it tap overseas funding.

“We haven’t received permission to commence operations yet. It is under process, when we get it, we will raise funds through it. We’re aiming to complete this in 2-3 months,” Das said, adding that that the company could look to issue various types of bonds, including social bonds, sustainability-linked debt and green financing funds, among others.

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“Once GIFT City is in operation, we can enable overseas funding through that office so that the developer gets a reduction of at least 3-4% in that overseas funding which is a big amount.”

Das added that the company has also sought to be added into the list of companies eligible for tax exemptions under Section 54EC of the Income Tax Act, 1961. The section allows for deduction on long-term capital gains of up to ₹50 lakh through capital gains bonds issued by lenders such as Rural Electrification Corporation (REC), National Highway Authority of India (NHAI), Power Finance Corporation (PFC), and Indian Railway Finance Corporation (IRFC).

“We are targeting 54EC. What is available to others, that should be given to me, which is easily doable. It’s a government process, they have already announced the bucket. They just need to add us to the list, the work is happening,” said Das.

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