Sumant Sinha, founder and chief executive officer of Goldman Sachs-backed green energy producer ReNew Power Ventures Pvt. Ltd, is in talks to raise up to $100 million in promoter financing to increase his stake in the company ahead of a proposed share sale, said two people aware of the development.
“Sumant Sinha’s stake in the company is around 6-7 odd percent currently. With the company looking to go public in the near future, a low promoter stake could result in investors having to offer part of their stake for the mandatory three-year lock-in period specified by Securities and Exchange Board of India ICDR (issue of capital and disclosure requirements) norms,” said one of the two people cited above, requesting anonymity as the talks are private.
The Sebi ICDR norms specify that at least 20% of the post-issue capital of the promoters has to be locked in mandatorily for three years, the first person said, adding that investors in the company, especially Goldman Sachs, want the least possible amount of stake to be subject to this—hence the efforts to increase Sinha’s stake in the company.
Investors in ReNew Power want Sinha’s stake to be above 10% and proceeds from the fund-raising would most likely be used for a secondary purchase of shares from investors to achieve this aim, said the second person cited above, also requesting anonymity.
Goldman Sachs and ReNew Power declined to comment on the development.
In an interview with Bloomberg in September, Sinha said the company’s initial public offering could potentially take place in the next financial year.
Sinha said he wanted to kick off the IPO after ReNew Power had 2 gigawatts (GW) of operational assets and could give investors a clear pathway to take its capacity to 3.5GW.
“The company has enough existing equity to develop 2.5GW and generated cash flow can be used to reach the 3GW mark,” Sinha added.
Founded in 2011 by Sinha, a former chief operating officer at wind turbine maker Suzlon Energy Ltd, ReNew Power now has around 1.2GW of operational capacity across wind and solar projects.
In October 2015, the company raised $265 million in equity capital from sovereign wealth fund Abu Dhabi Investment Authority and existing investors Goldman Sachs and Global Environment Fund. The round took the company’s total equity fund-raising to $655 million. Goldman has invested a total of $370 million in the company.
The company also recently refinanced its debt through offshore dollar bonds.
Last week, The Economic Times reported that ReNew Power raised $475 million by selling green bonds to overseas investors. Mint reported in October that ReNew Power was planning to raise up to $500 million through a bond issuance to refinance its debt obligations.
ReNew Power is not the only renewable energy company that is planning to go public.
In September, Mint reported that Hyderabad-based renewable energy producer Mytrah Energy India Pvt. Ltd has started preparations for an IPO that could see the company raise anywhere between $250 million and $300 million. Mytrah has hired investment banking firms Nomura Financial Advisory and Securities (India) Pvt. Ltd and IDFC Bank to manage the share sale.
Last month, Mint reported that OPG Power Ventures, which is listed on the London Stock Exchange’s Alternative Investment Market and has a portfolio of both thermal and solar power assets, is planning an Indian listing which could see the company raise at least Rs1,000 crore.