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Biggest Indian green energy firm ReNew Power gets SEBI nod to float mega IPO

ReNew Power Ltd, India’s largest green energy firm by capacity, has received regulatory approval to float an initial public offering (IPO).

The Securities and Exchange Board of India (SEBI) issued final observations on ReNew Power’s share sale proposal on 18 July.

This makes ReNew the 34th company to receive SEBI’s nod for an IPO in 2018. As many as 46 firms had received clearance for IPOs in 2017, according to the regulator’s website.

The company had filed its draft proposal on 8 May for an estimated Rs 7,000-7,500 crore ($1.04-1.11 billion) public offering.

ReNew, which counts Canada Pension Plan Investment Board (CPPIB) among its backers, will issue fresh shares worth Rs 2,600 crore in the offering that will also see existing investors cumulatively sell 94.37 million shares.

Global Environment Fund, USA (GEF) SACEF, which invests in high-growth clean energy and environment sustainability-related sectors, will sell 2.4 million shares, besides the sale of 12.17 million shares by Green Rock Energy and 79.78 million shares by GS Wyvern Holdings, the investment arm of Goldman Sachs Group.

The IPO will likely result in a 33.5-34.5% stake dilution on a post-issue basis, valuing the firm at around Rs 20,300-22,300 crore ($3.03-3.32 billion), VCCircle estimates show.

The Economic Times reported late last week that ReNew’s IPO may be postponed as investors were not particularly enthusiastic about aggressive valuations and size.

However, VCCircle could not independently verify these claims.

As many as nine merchant banks — Kotak Mahindra Capital Co, Bank of America Merrill Lynch, Goldman Sachs (India), JM Financial, JP Morgan India, HSBC Securities and Capital Markets (India), IDFC Bank, UBS Securities India, Yes Securities (India) — are merchant banks managing the IPO.

In April, ReNew Power had announced the acquisition of rival green energy firm Ostro Energy Pvt. Ltd from private equity firm Actis, striking the largest buyout in India’s renewable power sector.

The transaction would increase ReNew Power’s total operational and planned capacity to 5.6 gigawatt (GW) from 4.5 GW, the company had said while announcing the acquisition.

In queue
India’s renewable energy space has witnessed heightened deal activity, especially interest from foreign investors, as the country has set an ambitious target of adding 175 GW in clean energy by the end of 2022. India needs at least $125 billion in investments to achieve its energy needs.

This includes 100 GW of solar and 60 GW of wind power capacity besides ramping-up expenditure to build roads, ports, and airports in the broader infrastructure space.

Some of the world’s biggest pension funds, including CPPIB and Caisse de dépôt et placement du Québec (CDPQ), are also scouting for deals in India’s solar power sector, VCCircle had reported.

Apart from a growing list of secondary deals and project investments, several green energy firms are preparing to go public to benefit from the boom in secondary markets.

In September last year, ACME Group had filed a draft proposal with SEBI to float an IPO for its solar power arm. The company is looking to refile IPO documents.

In February this year, Singaporean infrastructure conglomerate Sembcorp Industries Ltd filed for an IPO to list its India energy unit.

The IPO will include a fresh issue of shares to raise up to Rs 4,095 crore ($631 million) and an offer for sale of 146.78 million shares by Sembcorp Industries and local joint venture partner Gayatri Energy Ventures India Ltd.

In addition, VCCircle reported in May about Chennai-based solar energy firm Refex Energy Ltd’s plans to go public.

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