Indian Energy Exchange files for IPO; Multiples, Aditya Birla PE to partially exit

Indian Energy Exchange files for IPO; Multiples, Aditya Birla PE to partially exit

By Ankit Doshi

  • 17 Jun 2017
Indian Energy Exchange files for IPO; Multiples, Aditya Birla PE to partially exit
Credit: Shah Junaid/VCCircle

Private equity-backed Indian Energy Exchange Ltd (IEX), the country's first exchange for trading of electricity and renewable energy certificates, on Friday filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) for an initial public offering (IPO).

The IPO comprises sale of 6.06 million shares through a secondary offering by existing shareholders, including private equity backers, power companies, financial institutions and a former top company official. It will see 20.83% of the total shareholding change hands, according to the DRHP.

Renuka Ramnath-led Multiples Alternate Asset Management, the PE arm of Kumar Mangalam Birla-led Aditya Birla Group and Madison India Capital will partially exit their investments, showed the draft document. Multiples has proposed to sell 2.72 million shares, representing 9.37% stake in the company. It holds 3.87 million shares in IEX.


Tata Power Company Ltd will completely exit its almost-10-year-old investment through the IPO by selling 1.25 million shares. The public issue will also see non-banking financial companies AF Holdings LLC and Kiran Vyapar Ltd sell shares, and a small portion being sold by former IEX managing director and CEO Jayant Narhar Deo.

IEX is a professionally-managed company, and does not have an identifiable promoter in terms of the SEBI ICDR Regulations as well as Companies Act 2013.

The total issue size is estimated at Rs 600-650 crore ($93-100 million), said a person with direct knowledge of the matter, requesting anonymity. “The IPO is targeted for the second half of the fiscal,” the person added.


The IPO deal will value IEX at roughly Rs 3,000 crore ($465 million), as per VCCircle estimates.

IEX will join a clutch of exchanges and financial market infrastructure companies that have either gone public over the years or are planning to do so.

Multi Commodity Exchange of India Ltd (MCX) became India's first exchange to go public, after it listed its shares five-and-a-half years ago. BSE Ltd became the second bourse to go public in February this year. BSE’s larger rival and India’s largest stock exchange, National Stock Exchange of India (NSE), is also working towards its IPO proposal and listing, and looking to public before the end of calendar 2017.


Securities depository firm Central Depository Services ltd (CDSL), which counts BSE as its promoter entity, is also floating its IPO on 19 June.

Past exits from IEX

IEX's likely valuation of Rs 3,000 crore during the IPO will be slightly better than the most recent exit from it. In March, PTC India Financial Services sold 1.51 million shares, or 5% stake, in the company for Rs 132.54 crore. The transaction valued IEX at Rs 2,600 crore.


In December 2016, Anil Ambani-controlled Reliance Infrastructure sold its entire stake in IEX to an undisclosed buyer, earning multi-fold returns on its nine-year-old bet. Reliance Infra sold its 4.122% stake in the power exchange operator for Rs 103 crore ($15 million), compared with Rs 1.25-crore investment in October 2007. The deal valued IEX at Rs 2,500 crore.

Global multi-stage investment firm Bessemer Venture Partners has completely exited IEX. Bessemer, which had invested in the firm in 2010, had sold around 4% stake in IEX in 2015 to TVS Capital for Rs 80-90 crore. The balance 6% stake that it sold in May 2016 to Dalmia Group would have fetched it Rs 130-150 crore, as per VCCircle estimates.

Earlier, in March 2016, Jindal Steel & Power Ltd sold 4.12% stake in IEX to Motilal Oswal PE.


Snapshot of the issue

The IPO will comprise a secondary market offering by existing shareholders. It will see 6.06 million shares being exchanged to provide partial exits to private equity investors.

The public issue will see 20.83% of the total shareholding change hands. In value terms, the total issue size is estimated at Rs 600-650 crore, valuing IEX at around Rs 3,000 crore.

Use of proceeds: The company is not raising any fresh capital from the IPO. The proceeds will go to existing shareholders.

Bankers: Axis Capital, Kotak Investment Banking, and IIFL Holdings are the financial advisers to the IPO.

Lawyers: Law firm Cyril Amarchand Mangaldas is the legal counsel representing IEX and selling shareholders. Shardul Amarchand Mangaldas & Co is the Indian law firm representing the merchant bankers while Sidley Austin LLP is appointed as the international law firm to the bankers.


Founded in 2008, IEX is India’s first exchange for electricity and renewable energy certificates. Its automated trading platform is used by power market participants such as state electricity boards, open-access consumers, power generators and power traders.

It is among the nearly three dozen subsidiaries and affiliate firms of the Jignesh Shah-promoted Financial Technologies (India) Ltd.

FTIL owned 26% in IEX, but had to divest its stake in the bourse and other companies in the aftermath of the payment crisis at subsidiary firm National Spot Exchange Ltd (NSEL).

Power regulator CERC, then commodity market regulator Forward Markets Commission (FMC) that was later merged with SEBI, and other regulatory authorities declared FTIL and the promoter unfit to run the exchange business, besides directing the company to divest its existing holdings in MCX-SX and four other entities.

IEX offers daily and term-ahead electricity contracts, besides renewable energy certificates for trading.

In fiscal 2016 and during the eleven months ended February 2017, IEX had a market share of 93.7% and 94.9%, respectively, of the traded contract volumes of electricity across all its product offerings.


IEX reported a net profit of Rs 113.65 crore for the financial year 2016-17 on revenues (from operations) of Rs 203.91 crore, according to the DRHP.

The company posted revenues (from operations) of Rs 175 crore for 2015-16 compared with Rs 144.77 crore in the previous year. Net profit stood at Rs 100.34 crore in 2015-16 compared with Rs 90.01 crore in the previous year.

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