IREDA plans to raise up to ₹2,000 cr via taxable bonds; stock up 2%

Shares of newly-listed Indian Renewable Energy Development Agency (IREDA) will be in focus today after the board of the state-owned company approved fundraising via issuing of taxable bonds on private placement basis. The power sector-focused non-banking financial company (NBFC) looks to raise up to ₹2,000 crore by unsecured, redeemable, non-convertible, non-cumulative, taxable, bonds.

The PSU company in an exchange filing said that it plans to raise bonds worth ₹500 crore at the base issue, with a green shoe option of up to ₹1,500 crore, aggregating to ₹2,000 crore. This is part of the mini-ratna company’s ₹26,000 crore borrowing programme for the financial year 2023-24, which was approved by the board on April 25, 2023.

“In line with the board approved borrowing programme for FY 2023-24, IREDA is planning to raise unsecured, redeemable, non-convertible, non-cumulative, taxable, bonds amounting to ₹500 crore for cash at par (“Base Issue”) with an option to retain oversubscription by way of green shoe option upto ₹1,500 crore, aggregating to ₹2,000 crore (“Series XV-C”) on private placement basis,” IREDA says in a BSE filing on Tuesday.

As per the release, the bonds are proposed to be issued under the Series XV-C with a tenor of 10 years. The issue will open today and the allotment date is December 22, 2023.

The company intends to use funds raised by the issuance of taxable bonds for lending towards renewable energy (RE) projects and other general corporate purposes. For a NBFC, fundraising through various sources is a part of normal business operations.

Cheering the news, shares of IREDA rose 2% to ₹114.79 after a gap up opening at ₹114.42 against the previous closing price of ₹112.43 on the BSE. The PSU stock, which made a strong debut on November 29, 2023, trades 258% higher than its IPO price of ₹32 apiece with a market capitalisation of ₹29,915 crore. The stock hit a record high of ₹123.37 on December 14, 2023.

IREDA raised ₹2,150 crore from its IPO, which was a combination of a fresh issue of ₹1,290.13 crore and an offer for sale of ₹860.08 crore by existing shareholders. The company aims to use IPO proceeds from fresh issue of equity shares for capital requirements and onward lending.

Established in 1987, IREDA, which comes under the Ministry of New and Renewable Energy (MNRE), is the first PSU to list on stock exchanges after a long gap of 17 months post LIC's market debut in May 2022. The company is engaged in promoting, developing and extending financial assistance for setting up projects relating to new and renewable sources of energy and energy efficiency.

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