Adani Green Energy and ReNew Power plan IPO to fund growth plans

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Adani Green Energy and ReNew Power, two Indian renewable energy companies, are planning stock market listing for mobilising funds, Reuters reported.

Adani Green Energy, a subsidiary of Indian trading firm Adani Enterprises, is expected to be spun out and listed on Indian stock exchanges within the next two weeks.

ReNew Power, India’s biggest company in terms of renewable energy assets, is expected to file papers with regulators for an initial public offering as early as next week.

The two companies will be the first new pure-play renewable energy firms to list in India, since wind energy firm Orient Green Power’s listing eight years ago.

India’s renewable energy has in recent years drawn significant interest from large global sovereign funds and private equity firms including Warbug Pincus, Abu Dhabi Investment Authority, Singapore’s GIC and Macquarie Capital.

The listings will help investors gauge market interest and set a bar on valuations for rivals that may also explore listings, say bankers.

“Adding over 100 gigawatts of renewable capacity will require significant capital and private markets alone can’t fund all of it,” said Alok Verma, executive director of Investment Banking at Kotak.

India will need over $125 billion to fund its plan to add 175 gigawatts of renewable power to its grid by 2022. The clean energy industry is looking beyond domestic banks, which account for most of the industry’s financing.

Researcher Mercom estimates corporate funding for the global solar industry was $12.8 billion last year.

With operating assets of 3.6 GW and 2 GW under construction, ReNew is seen as big enough to raise substantial capital from the market.

ReNew, which counts Abu Dhabi Investment Authority and other big firms as investors, could raise up to $900 million.

The companies are expected to be followed by several other companies aiming to raise funds. Sembcorp India, a unit of Singapore’s Sembcorp Industries, ACME Solar and Mytrah Energy India also have plans for listing.

“We’re not going to see six to nine successful IPOs in the next two years. We might see one or two successful ones,” said Rahul Goswami, managing director of Greenstone Energy Advisors, noting small new players have undermined economics of some assets by bidding aggressively at very low tariffs.

In India, firms seeking to win rights to set-up renewable energy assets enter a bidding process with the company offering to supply power at the lowest possible tariff winning the auction process.

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