Union government gears up to sell IREDA stakes and ready to launch IPO

The Cabinet Committee on Economic Affairs under Prime Minister Modi has decided to sell its stakes in the IREDA through an IPO.

The Union government’s stake in the Indian Renewable Energy Development Agency Limited (IREDA), a central public sector undertaking (CPSE) under the Ministry of New and Renewable Energy (MNRE), will be sold in tranches as part of the company’s initial public offering (IPO), according to the Cabinet Committee on Economic Affairs (CCEA), which is presided over by Prime Minister Narendra Modi. IREDA finances renewable energy and energy efficiency projects.

IREDA will enter the capital markets in the upcoming fiscal year, as per a Moneycontrol report that cited anonymous senior officials of the CPSE. As per the government’s press release, the IPO will help in unlocking the value of the government’s investment in the IREDA and will provide an opportunity for the public to acquire a stake in the national asset and draw benefits therefrom.

The government also claimed that the IPO will help IREDA raise a part of its capital requirement for meeting growth plans without depending on the public exchequer, and improve governance through greater market discipline and transparency arising from listing requirements and disclosures.

The Department of Investment and Public Asset Management (DIPAM) has been handed over the process of IREDA’s IPO listing.

As per the government’s records, the IREDA was incorporated in 1987 and is presently a Mini-Ratna (Category-I) CPSE that is 100% owned by the Government of India and is involved in funding renewable energy and energy efficiency initiatives in India. It has been authorised by the Reserve Bank of India (RBI) to operate as an NBFC.

The company has been playing a pivotal role in achieving the government’s target of generating 500 GW of renewable energy by 2030 as per the Paris Accord on Climate Change.

The government’s press statement on March 17th said that the decision to list IREDA’s IPO supersedes the June 2017 CCEA decision allowing the company to issue Rs 139m worth of fresh equity shares of Rs 10 each to the public on a book-building basis through IPO.

The government claimed that the instant decision to list the IPO has been necessitated due to a change in the capital structure following an infusion of capital to the tune of Rs 15bn by the Union government in March 2022.

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