Gandhinagar: State-run Indian Renewable Energy Development Agency (Ireda) is considering foraying into financing projects abroad through its subsidiary GIFT City, besides raising funds from international green funds.
In an interview, Ireda Chairman and Managing Director (CMD) Pradip Kumar Das said the company would largely finance solar component manufacturing and green hydrogen business in India through subsidiary Ireda Global Green Energy Finance IFSC Ltd. which would largely meet export demand.
“We have already opened our office in GIFT City, we need to get it up and running. Once it starts working, we will borrow from here and lend from here. What it would do is that there would be no requirement of foreign currency conversion. Indian developers setting up projects here will get loans through GIFT City. We will also prefer to lend to Indian developers setting up projects abroad,” Das said, adding that this would help the company make its debut in the international market.
“We will approach green funds and get them through Gift City so that the borrowing will be less and hedging costs will also be saved. There are several developers who are coming up with domestic projects where they earn revenue through exports and their capital expenditure is in foreign currency. So, they would invest in foreign currency and repay us in foreign currency when they export, mainly for manufacturing of solar components and green hydrogen.”
The first transaction is expected
The state-run company had set up its subsidiary at the International Financial Services Centre (IFSC) located in GIFT City, Gujarat, in May this year. The company is yet to make its first transaction through Ireda Global Green Energy Finance IFSC Ltd.. Das said Ireda Global Green Energy Finance IFSC Ltd is in talks with several companies for funding. The mergers will be finalised in the next few days.
Several public sector undertakings have set up subsidiaries with the IFSC for investment and financing purposes. Power Finance Corporation has already set up a subsidiary, while REC Ltd has received approval from the Reserve Bank of India (RBI) for one.
Regarding the company’s planned IPO, the CMD said that the Centre’s approval for the proposed stake dilution is expected soon. He said the company is looking to raise around ₹4,500-5,000 crore FPO.
“We will go to market at the end of this year. We need new capital of approximately ₹“4,500-5,000 crore. Once we raise capital, the Indian government’s stake will be reduced. For this, we have requested them to allow us to sell up to 10%. It depends on the government how much stake it allows us to sell. We hope to get approval soon,” he said on the sidelines of RE Invest 2024, adding that the company could raise more than the targeted amount. ₹5,000 crore rupees.
Listed last November
The company went public in November last year. Boston Stock Exchange shares closed at ₹227.75 on Tuesday, down 0.22% from its previous close.
On the company’s application to the government for inclusion under Section 54EC of the Income Tax Act, Das said the application is in advanced stages of discussion with the Centre and an approval is expected within a month. The company’s inclusion under the section would exempt investors buying bonds of the company from capital gains tax, making its bonds more attractive.
“By mid-October we could have some results on this because before opting for the FPO we need to have this,” he said.
Among other financial institutions and banks, Ireda also pledged to increase its support for the green transition. It has pledged to finance more ₹5 trillion by 2030. So far it has committed to projects worth almost ₹2 trillion and financed a cumulative renewable energy capacity of 27 GW.
Energy transition projects financed by the company comprise 58% conventional renewable energy projects, including solar, wind and hydropower, while emerging sectors such as CNG, ethanol, e-mobility and charging infrastructure account for 18%. The remaining 24% has been provided to state-owned utilities for their renewable energy projects.
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