The Securities and Exchange Board of India (SEBI) has approved ACME Solar Holdings’ Initial Public Offering (IPO) worth ₹22,000 million (~$336.86 million).
The face value of each equity share is ₹10 (~$0.15) and they will be up for grabs on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). In total, 2,200 million equity shares will be up for trade.
India is witnessing a trend wherein more and more companies operating in the renewable energy sector are opting for an IPO. Recently, the Indian Renewable Energy Development Agency (IREDA) approved the launch of its IPO for 139 million equity shares. In October 2017, the Indian Energy Exchange (IEX) launched its IPO issuing 6,065,009 equity shares at a face value ₹10 (~$0.15) each. There are other companies with large portfolios also considering an IPO. Currently Azure Power is the only solar company that has gone public.
ICICI Securities, Citigroup Global Markets India, and Deutsche Equities India will manage ACME’s IPO. ACME Solar Holdings filed a preliminary Draft Red Herring Prospectus (DRHP) with SEBI in October 2017.
ACME will also perform a pre-IPO placement of up to 5,222,079 equity shares to certain investors for an amount not exceeding ₹5,000 million (~$76.56 million).
The promoters, Manoj Kumar Upadhyay and ACME Cleantech Solutions Private Limited, have provided an aggregate of 20 percent of the fully diluted post-issue equity share capital of the company held by them toward the minimum promoters’ contribution. It has been locked-in for a period of three years from the date of allotment.
ACME Solar will utilize ₹4,356.9 million (~$66.71 million) to repay debt from Piramal Finance and Innovador Traders. ACME Solar also plans to repay ₹5,410 million (~$82.84 million) to its parent organization, ACME Cleantech. It will use ₹8,690 million (~$133.06 million) to finance Rajasthan’s Bhadla solar power projects which it won in an auction conducted in July 2017.
ACME quoted a tariff of ₹2.44 (~$0.037)/kWh (lowest tariff recorded in India) to win the bid to develop a 200 MW project in the 500 MW Bhadla Phase-III Solar Park auction. After ACME won the auction at such an aggressive price point, Chinese module prices reversed their downward trend and began rising in Q3, making project economics difficult and forcing the company to go public to raise the required funding.
According to Mercom’s India Solar Project Tracker, ACME has installed solar projects totaling 924 MW and has projects of ~1 GW in its development pipeline.
In the first three quarters of 2017, the Indian solar sector saw almost $4.2 billion (~₹272 billion) in announced corporate, project funding, and M&A deals, according to the Solar Funding and M&A Report released by Mercom Capital Group. By comparison, $2 billion (~₹129 billion) was reported during the same period of 2016. As of Q3 2017, total corporate funding (VC/PE, public market, and debt) raised by Indian solar companies made up almost 34 percent of the global total. In terms of venture capital and private equity investments, Indian companies raised almost 60 percent of the global total.