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India’s Largest Clean Energy Firm ReNew Power is Raising Funds via Sale of Assets after dropping IPO Plan

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India’s largest renewable energy IPP (Independent Power Producer) , ReNew Power, is considering raising funds through asset sales, after dropping out its plan for an initial public offering (IPO), reported Business Standard.

The Gurgaon-headquartered company has renewable assets of over 7 gigawatts, of which more than 4 gigawatts are operational. It makes sense to sell some assets when “the ability to execute and the opportunity to grow” exceeds the ability to finance projects and the company could “sell assets outright” or have co-investors, ReNew Power Chairman Sumant Sinha said, without elaborating on the amount of capacity sale or the funds being targeted.

Backed by Asian Development Bank and Global Environment Fund, ReNew Power had raised $375 Mn from international investors via green bonds, in March this year. Barclays (B&D), Goldman Sachs, HSBC, JP Morgan and YES Bank were the book runners for the green bond issue.

As of May 2018, Goldman Sachs, Canada Pension Plan Investment Board and Green Rock, hold 48.62%, 16.22% and 15.92%, respectively, of ReNew Power’s paid-up share capital.

According a report by Economic Times, Goldman Sachs, CPPIB and Abu Dhabi Investment Authority, are investing $300 million in ReNew Power via a rights issue, citing people with knowledge of the matter. The proceeds will be used to fund growth and repay existing debt.

A rights issue is a dividend of subscription rights to buy additional shares in a company made to the company’s existing share holders.

The company’s unit, Renew Solar Power, has bonds worth Rs 100 crore maturing in November, and Renew Power has ~850 crore of securities maturing in March 2020, according to data compiled by Bloomberg.

“They can co-invest along with us or buy our assets while we continue to run those assets,” said Sumant Sinha, ReNew Power Chairman & Founder, in an interview to Business Standard. ReNew Power will look at either creating its own infrastructure investment trust, or InVit, to raise funds or use an existing structure.

InvITs are mutual fund like institutions that enable investments into the infrastructure sector by pooling small sums of money from multitude of individual investors for directly investing in infrastructure so as to return a portion of the income (after deducting expenditures) to unit holders of InvITs, who pooled in the money.

Besides Renew Power, which has withdrawn its plan for an IPO or considering an InvITs, another solar power developer and Renew Power’s rival, Acme Solar Holdings, had also suspended its plan of public listing in last year and said it will opt instead to raise funds through a private InVit, citing turbulence in the South Asian country’s stock market and uncertainty over renewable energy policies.

“There is no specific plan for the IPO right now,” Sinha said “Elections are now behind us. We’ll have to see how markets evolve, what the government does, there are these key issues to be addressed about how the sector can be in a healthier position.”

Industry groups have said the viability of Indian wind and solar projects is being tested by tariff caps set during the auction process, the preferred method for attaining Prime Minister Narendra Modi’s ambitious goal of installing 175 gigawatts of renewable capacity by 2022. While the auctions have enabled distributors to lock in some of the cheapest green power rates in the world, industry groups said it’s leading to unsustainably low electricity prices.

ReNew Power was founded in 2011 by Sumant Sinha, who was the Chief Operations Officer of Suzlon Energy. He is an alumnus of the Indian Institute of Technology Delhi, Indian Institute of Management Calcutta and Columbia University.

In April last year, ReNew Power acquired Ostro Energy Private Limited to create India’s largest clean energy firm by installed capacity.

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