In the first green power IPO in India, renewable energy company Orient Green Power Ltd is planning to hit the market with an initial public offering (IPO) by second quarter of 2010. Orient Green, which would become one of the first large independent power producers in the clean energy space to for a listing, is looking for a valuation of around Rs 2,500 crore ($542 million).
The company could look at diluting up to 20% stake in Orient Green, said sources familiar with the development. Goldman Sachs and UBS have been given the mandate for the proposed listing of the Shriram EPC subsidiary.
When contacted, a Shriram EPC spokesperson declined to comment. Orient Green Power is involved in building and operation of clean energy power plants like wind, hydro, and biomass. The IPO is expected to be keenly watched by venture capital and private equity community in India. While the investments in the renewable energy segment has picked up over the last few years, the returns potential of this sector in India is still to be proved.
Orient Green Power was formed as a joint venture between Shriram EPC and Bessemer Venture Partners in 2006, with both the firms pooling in $20 million in equity capital. It was followed by another round of $55 million in private equity funding led by Olympus Capital, which invested from its $250 million Asia Environmental Partners. Bessemer is also a shareholder in Shriram EPC along with other PE players like UTI Ventures.
According to its website, Orient Green Power has 175 MW in operations across India. It has another projects worth 500 MW at various stages of development, with around 300 MW coming in wind energy and 200 MW in biomass. OGPL along with Dutch firm Leitwind BV is developing 130 MW of wind projects across Eastern Europe and Italy.
Renewable energy currently account for 8% of India’s total power capacity of about 150,000 MW but the government aims to double green power generation to 25,000 megawatts in four years, according to this Reuters report. The alternative energy companies also get subsidised loans to build plants, tax breaks and tariff subsidies. Several PE funds are looking to make the best of this opportunity and have launched funds focused on the clean energy sector.