The power sector in India is poised for significant growth in the coming years, driven by ambitious capacity addition targets to ensure energy security and meet climate commitments. To finance the rapid expansion of power projects, companies are actively leveraging public markets through initial public offerings (IPOs), qualified institutional placements (QIPs), infrastructure investment trusts (InvITs) and bond issuances. According to EY’s Global IPO trends report, 2023 witnessed a record 48 per cent year-on-year increase in IPO fundraising by Indian companies. Over 220 IPO deals successfully raised $6.9 billion, setting the stage for accelerated activity in 2024.
Power Line presents a review of the capital raised through the public route in the past year…
Bond issuance
A number of key market players issued bonds in the past year for the purpose of refinancing and raising funds. In January 2024, the Asian Infrastructure Investment Bank invested around $58.4 million in India’s largest renewable energy InvIT. The InvIT, Suatainable Energy Infra Trust [SEIT], has eight operating solar power generation assets with 1.54 GW peak total capacity, located across India. SEIT is co-sponsored by Mahindra Susten Private Limited, the dedicated renewable energy platform of one of the largest Indian multinational conglomerates (the Mahindra Group); and Ontario Teachers’ Pension Plan, a leading global institutional investor.
In September 2023, the Power Grid Corporation of India’s (Powergrid) board approved a proposal to raise Rs 22.5 billion through bond issuance to support its capex in 2023-24, in the second tranche. The POWERGRID Bonds – LXXIV (74th) Issue 2023-24 will have a base issue size of Rs 5 billion and an additional greenshoe option of Rs 17.5 billion, taking the total fundraising to Rs 22.5 billion. The bonds are redeemable at par in 10 equal instalments, with interest payments on a yearly basis. The fundraising will part-finance the company’s capex requirement, provide intercorporate loans to wholly owned subsidiaries/joint ventures, and serve general corporate purposes by securitising the cash flows of four operational special purpose vehicles up to March 2034.
In June 2023, RattanIndia Power Limited raised Rs 11.25 billion from a consortium of lenders, which the company will utilise to refinance its debt. Of this, Rs 7.32 billion has been invested by Kotak Investment Advisors, while the remaining is from domestic institutions and family offices.
In June 2023, Torrent Power Limited raised Rs 6 billion through the issuance of Series 11-60000 secured, rated, listed, taxable, non-cumulative and redeemable non-convertible debentures at a coupon rate of 8.5 per cent per annum.
In May 2023, REC Limited undertook an exclusive listing of $750 million of green bonds raised under its Global Medium-Term Programme worth $7 billion at the Gujarat International Finance Tec-City’s International Financial Services Centre stock exchanges. The bond issue was oversubscribed by around 3.5 times by 161 investors. Investors from across the globe participated in the issue, with Asia Pacific accounting for 42 per cent; Europe, the Middle East and Africa for 26 per cent; and the US for 32 per cent.
In April 2023, ReNew Energy Global Plc’s wholly owned subsidiary, Diamond II Limited, raised $400 million through the issue of senior secured green bonds. These bonds witnessed strong demand from investors in the US, Europe and Asia. The corporate style notes carry a US dollar coupon rate of 7.95 per cent. Proceeds from the issue will be used to refinance the existing dollar debt and fund various growth initiatives.
In February 2023, NHPC Limited raised Rs 9.96 billion through the issuance of unsecured, redeemable, non-convertible, non-cumulative and taxable AD series bonds on a private placement basis. The company allotted the 7.59 per cent per annum bonds on February 20, 2023 for 15 years, with the maturity date of February 20, 2038.
In February 2023, the Indore Municipal Corporation’s non-convertible green municipal bonds were oversubscribed by 5.91 times, generating a total of Rs 7.21 billion. The issue has a face value of Rs 1,000 each. The base issue size was Rs 1.22 billion, with an option to retain oversubscription up to Rs 1.22 billion, aggregating up to Rs 2.44 billion.
In February 2023, NTPC Green Energy Limited (NGEL) invited bids for a rupee-denominated term loan of up to Rs 90 billion. NGEL intends to raise fresh debt and repay the outstanding liability of Rs 82 billion to NTPC Limited. Additional funds of about Rs 8 billion will be required for additional debt liability and balance capex payments for projects that are yet to achieve full commercial operation.
Equity moves
The year witnessed some major IPO announcements by the IREDA and Waaree Energies. The segment also saw some notable equity investments, with foreign investors picking up stakes in industry majors, including the Adani Group.
In January 2024, Waaree Energies Limited submitted draft papers to the Securities and Exchange Board of India (SEBI) for an IPO aimed at raising Rs 30 billion. The IPO will consist of a fresh issue of 3.2 million shares and an offer for sale, including 2.7 million shares from promoter shareholder Waaree Sustainable Finance, 450,000 shares from Chandurkar Investments, and 50,000 shares from Samir Surendra Shah. The shares, with a face value of Rs 10, are intended to fund the establishment of a 6 GW ingot, wafer, and solar cell and module manufacturing facility in Odisha.
In December 2023, IREDA raised a total of Rs 6.43 billion from anchor investors ahead of the launch of its IPO. The company allotted 201,019,726 equity shares at Rs 32 apiece to the anchor investors. These investors include Goldman Sachs, SBI Banking and Financial Services Fund, HDFC Mutual Fund, and ICICI Prudential Midcap Fund. The IPO’s price band has been fixed at Rs 30 to Rs 32 per share.
In December 2023, Sterling and Wilson Renewable Energy Limited completed a fundraise of Rs 15 billion through the QIP route. The securities issuance committee of the board of directors approved the issue and an allotment of 43,227,665 equity shares of face value Re 1 each to eligible qualified institutional buyers at an issue price of Rs 347 per equity share (including a premium of Rs 346 per equity share). The Rs 15 billion QIP witnessed a strong response from both domestic mutual funds and marquee global foreign institutional investors.
In December 2023, the India Grid Trust (IndiGrid) secured Rs 6.7 billion through a SEBI compliant institutional placement (IP) process. Initiated on December 5, 2023, the IP process witnessed significant interest from both established and new institutional investors in India and around the world. In September 2023, IndiGrid successfully secured over Rs 4 billion through a preferential issue. With the recently finalised IP, the company has secured approximately Rs 10.7 billion in equity funds during fiscal year 2023-24. The funds generated from the recently concluded IP and the preferential allotment will be utilised to reduce existing debt.
In July 2023, the Adani Group announced that GQG Partners had acquired additional equity shares in Adani Energy Solutions Limited (formerly Adani Transmission Limited), AGEL and AEL. With this, GQG Partners’ shareholding in AGEL and ATL has increased to 6.54 per cent, and in AEL to 5.4 per cent of the paid-up capital of the company.
In June 2023, the Avaada Group announced the successful closure of a $1.3 billion funding round. This is the largest equity round ever raised by any green energy company in Asia. The funding will be used to bolster Avaada’s green hydrogen, green methanol, green ammonia, solar manufacturing and renewable power generation ventures.
In March 2023, NTPC Limited completed the transfer of 15 renewable energy assets to NGEL, its wholly owned subsidiary, through a business transfer agreement for a consideration of Rs 100.67 billion. Further, NTPC has completed the transfer of 100 per cent equity shareholding in NTPC Renewable Energy Limited to NGEL through a share purchase agreement for Rs 7.31 billion.
In March 2023, GQG Partners announced the completion of a Rs 154.46 billion investment in a series of secondary block trade transactions in Adani portfolio companies, including Adani Ports and Special Economic Zone Limited, AGEL, Adani Energy Solutions Limited (formerly Adani Transmission Limited) and AEL. The investment has made GQG a key investor in the development and growth of critical Indian infrastructure.
In March 2023, the Cabinet Committee on Economic Affairs approved the listing of IREDA on the stock exchanges through an IPO. This will be done through a part-sale of the government’s stake in it. The aim is to raise funds for IREDA through the issue of fresh equity shares.
In January 2023, Indian Energy Exchange Limited (IEX) had opened the buyback of equity shares of up to Rs 980 million at a price not exceeding Rs 200 per share through the open market route. The company subsequently announced the closure of the share buyback with effect from March 16, 2023. Till March 15, 2023, the IEX bought back a total of 6,976,798 fully paid-up equity shares. The total amount utilised towards the buyback was Rs 979.8 million, representing 99.99 per cent of the maximum buyback size.
In December 2022, the Inox Gujarat Fluorochemicals Limited (GFL) Group raised around Rs 15 billion across its entities to pare its debt. Around Rs 7.4 billion was raised through an IPO by Inox Green Energy Services Limited, which has largely been utilised towards debt repayment. In addition, the promoters have raised Rs 7.2 billion through the sale of GFL shares. The proceeds of Rs 6.23 billion (net of expenses and taxes) have been infused in Inox Wind Limited.
Outlook
The fundraising outlook for the power sector in 2024 remains robust, driven by several key factors such as the ambitious renewable energy target of 500 GW by 2030, necessitating an investment of nearly $300 billion according to the National Electricity Plan.
In conclusion, the recent trend of capital raising in the power sector, particularly through public offerings, reflects the dynamism and growth potential of the industry. Companies operating in the solar, wind and infrastructure segments have effectively utilised capital markets to fund their expansion, settle debts and pursue strategic initiatives. The positive performance of several IPOs and rights issues is an encouraging growth signal, underscoring the high level of investor confidence in the power sector.