IREDA Plans FPO to Secure Funding for Green Energy Projects

State-run Indian Renewable Energy Development Agency (IREDA) is set to launch a follow-on public offer (FPO) within the current financial year to meet capital requirements and fund green energy projects. Additionally, the non-banking financial company (NBFC) plans to raise funds through perpetual loans. Last November, IREDA successfully raised ₹2,150 crore through an initial public offering (IPO), which was oversubscribed about 39 times.

IREDA Chairman and Managing Director Pradip Kumar Das announced that the FPO is essential to support renewable energy projects as the planned borrowing of ₹24,200 crore for FY25 is insufficient. He noted that the ideal periods for raising capital are typically September to November and February. Following the new government's formation by July 6, 2024, the approval process for the FPO will commence, which may take 4-6 months. The amount to be raised has not yet been disclosed, and the proposal will need Union Cabinet approval.

The FPO is targeted for the second half of the current financial year or the first half of FY26. Das highlighted that IREDA, which has operated in the renewables sector for nearly four decades, expects a rise in loan disbursements in FY25 due to the government's push for renewable energy, necessitating increased financial resources.

Currently, IREDA’s net worth stands at approximately ₹8,559.43 crore, with a loan book around ₹59,698 crore. The company disbursed about ₹25,089 crore in FY24, up from ₹21,639 crore in FY23, ₹16,071 crore in FY22, and ₹11,000 crore in FY21.

Das emphasized the need for a Green Taxonomy to facilitate raising around ₹25 lakh crore for green energy projects by 2030. He also mentioned that IREDA will soon issue bonds eligible for exemption under Section 54EC of the Income Tax Act, joining REC, PEC, National Highway Authority of India, and Indian Railway Finance Corporation in issuing these capital gain bonds.

IREDA has also established a wholly-owned subsidiary, IREDA Global Green Energy Finance IFSC, at the International Financial Services Centre (IFSC) in GIFT City, Gujarat. This offshore platform aims to secure competitive funding and reduce hedging costs, unlocking new business opportunities and expanding IREDA's global presence in the renewable energy sector. This move aligns with IREDA's vision of promoting sustainable development through investments in renewable energy, both domestically and internationally.

HBL