ReNew Power, the largest clean energy producer of India is thinking of an Initial Public Offering of their shares with hopes of raising about $600Million in cash after they closed their latest funding round from JERA of Japan, a joint venture between Chubu Electric Co. and Tokyo Electric Co. This funding round pushed the company’s valuation to a sum of $2Billion, according to people who were directly aware of these plans.
The people also said that current investors of ReNew Power like Abu Dhabi Investment Authority, Global Environment Fund, Asian Development Bank and the largest shareholder of the company Goldman Sachs could release some of their stakes in this proposal, which would primarily deal with an offer for sale of the company’s existing shares.
Merrill Lynch, Bank of America, Kotak and HSBC are among the banks that want a role in the share sale of the company.
Orient Green Power, based in Chennai, is the only company in India that is listed as a renewable energy company. A solar energy producer, Azure Power is listed on NYSE (New York Stock Exchange) while Mytrah Energy is on the AIM (Alternative Investment Market) of the LSE (London Stock Exchange). Even GreenKo was listed in AIM earlier.
In equity from the investors, ReNew Power has raised about $850Million since its earlier foundations were set in 2011. This amount accounts for about 10% FDA in the sector of renewable energy since 2000.
The company is also planning to raise about $200Million before its IPO either through quasi-equity or equity instruments to augment their planned, commissioned and existing capacity of 3000 Megawatts. The power generating assets in the company portfolio are evenly split between solar and wind plants.
This IPO’s timing could be a critical one as very few companies in the renewable energy sector in India are listed and the company’s business model hasn’t been tested yet for returns by the investors in the public market.
Mytrah, Tata Power Renewable, Greenko and Adani Green are few of the independent power producers that have planned and commissioned projects with power capacities of about 2000 Megawatts.
The generation of renewable energy is done by using fuel sources that are non-fossil based, like sunlight and wind and this capacity is just about 15% of the total power generation of 300,000 Megawatts. This total would definitely increase in the coming future.
Companies in the renewable energy sector can return the capital investment to their investors in time frame of 8 to 9 years and require long term funding. The banker that was pitching his services to ReNew for their IPO said that depending on the ability to run a tight ship and execute well, the winners will be separated from all the losers.