Renewable energy firm ACME Group has filed a draft proposal with the Securities and Exchange Board of India to take its solar power arm public through an initial public offering.
Gurgaon-based ACME Solar Holdings Ltd plans to issue shares worth Rs 2,200 crore ($335 million) to pay debt and financing a power project, according to the draft red herring prospectus.
The company was previously contemplating a public offering through an infrastructure investment trust (InvIT), but chose the IPO anticipating weak investor sentiment for the new alternative.
Merchant bankers feel the poor performance of the first two InvITs had damped investor sentiment at a time when at least five other infrastructure companies were seeking to float InvIT IPOs.
ACME’s peer group firm ReNew Power Ventures Pvt. Ltd, India’s largest renewable energy company, is also gearing up for an IPO that could see largest shareholder Goldman Sachs trim its stake. ReNew Power may raise as much as $600 million from the IPO, The Economic Times had reported previously.
ACME Solar joins nearly two dozen firms that are looking to go public to benefit from the rise in equity markets. Notwithstanding the recent declines in equity markets, the BSE’s benchmark Sensex has risen nearly 17.5% so far this calendar year.
This rise, driven by liquidity and fund inflows on hopes of economic growth and reforms, has encouraged nearly two dozen firms to go public on main board this year. Together, these firms have raised more than Rs 30,000 crore. Most of these companies have listed at a premium. And many of them have managed to consolidate their gains.
Primary market activity in India picked up pace after four years of slow momentum till mid-2014 when the BJP-led government took over. In 2015, 21 companies had raised about Rs 14,000 crore, as per stock-exchange data.
Last year, 26 companies tapped primary markets and raised a total of Rs 26,500 crore, the highest in six years.
Here’s a snapshot of ACME Solar proposed IPO:
Issue:
The company will issue new shares worth Rs 2,200 crore.
Use of proceeds:
ACME Solar will use the net proceeds to repay and make advance payment of certain debts, including a loan of Rs 435.69 crore from Piramal Finance and Innovador Traders Pvt. Ltd. The company also aims to repay a loan of Rs 541 crore availed from the promoter entity ACME Cleantech.
The company has set aside Rs 869 crore to fund engineering, procurement and construction works for the Bhadla power project in Rajasthan and the remaining amount for meeting expenses towards general corporate purposes.
Bankers:
ICICI Securities, Citigroup Global Markets India, Deutsche Equities India are the merchant bankers managing the IPO.
Lawyers:
Shardul Amarchand Mangaldas & Co is the legal counsel representing the company. Luthra & Luthra Law Offices and Simmons & Simmons are the Indian and international legal counsels to the merchant bankers, respectively.
Company:
ACME Solar is one of the largest solar power producers in India, having a portfolio of operational and under-construction projects with total capacity of 2,351 megawatt peak, or 1,814 megawatt.
The company develops, builds, owns, operates and maintains utility-scale grid-connected solar power projects, and generates revenue by selling electricity to central and state government entities and government-backed corporations. It aims to develop and operate on-grid solar power projects using the latest photovoltaic technology.
The company, owned and operated by ACME Cleantech and Manoj Kumar Upadhyay, was established in 2015 to consolidate the ACME Group’s solar power business and to capitalise on the opportunities in the solar power sector. After the restructuring, the company acquired all of ACME Group’s solar power assets.
Financials:
The company reported consolidated net loss of Rs 68.04 crore for fiscal year 2016-17 on revenue from operations of Rs 292.32 crore.
In 2015-16, its first full year of operation, its revenue was Rs 41,000 and it posted a net loss of Rs 5.48 crore.