IREDA IPO subscribed 38.8x as QIBs rush in

• Qualified institutional buyer portion of the issue was subscribed over 100x.
• The issue which closes on November 23, has fixed a price band of ₹30-32 per share.
• It intends to use net proceeds to augment its capital base to meet future capital requirements and onward lending.

Government of India-owned IREDA’s initial public offer (IPO) was subscribed 38.8 times the shares on offer.

The ₹2,150 crore issue received outsized interest from qualified institutional buyers (QIBs), as this portion was subscribed 104 times.

The non-institutional investor portion was subscribed 24 times while the retail portion was subscribed 7.7 times.

The company has raised ₹643 crore from anchor investors like SBI Banking & Financial Services Fund HDFC Mutual Fund, ICICI Prudential PSU Equity Fund and more; ahead of the IPO.

Source: BSE

IREDA’s IPO closes on November 23. It fixed a price band of ₹30-32 per share. Investors can bid for a minimum of 460 shares and in multiples of 460 thereafter.

The public financial institution (PFI) has over 36 years of experience in promoting, developing and extending financial assistance for new and renewable energy projects. It also serves energy efficiency and conservation projects.

The PFI intends to use the net proceeds from the fresh issue towards augmenting its capital base to meet future capital requirements and onward lending.

It provides financial products and related services, from project conceptualisation to post-commissioning, for and other value chain activities like equipment manufacturing and transmission. As of September 30, 2023, it had a diversified portfolio of term loan outstanding amounting to ₹47,514 crore.

Its revenue from operations grew 24% in FY23, as compared to the year before. Its net profit grew 36% during the same period. Its capital to risk-weighted asset ratio (CRAR) stood at 18.8% for FY23. Its gross non-performing assets (NPA) stood at 3.21% by the end of FY23.

Its finances are indirectly linked to that of state electricity distribution companies or discoms. The poor health of state discoms may lead to delays in payments to renewable energy projects that they finance.

Certain discoms that purchase electricity from its borrowers sought revision in the terms of their existing power purchase agreements (PPAs). A downward revision in the tariffs could negatively affect its borrowers, impacting their repayment capabilities.