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IREDA shareholders give nod to Rs 5,000-crore fund-raise plan via QIP of equity shares.

News in Detail

The shareholders of Indian Renewable Energy Development Agency Ltd. (IREDA) have approved a proposal to raise ₹5,000 crore via a Qualified Institutional Placement (QIP) of equity shares.

The funds will strengthen IREDA’s green financing capabilities and support India’s clean energy goals, including its target of generating 500 GW of non-fossil-based electricity by 2030.

The ₹5,000 crore will be raised in one or multiple tranches through equity shares issued to Qualified Institutional Buyers (QIBs), such as mutual funds, pension funds, and venture capital firms. Post-issue, the Government of India’s stake will be reduced by up to 7%.

About Qualified Institutional Placement (QIP)

It is a method used by publicly listed companies to raise capital by issuing shares or other securities directly to "Qualified Institutional Buyers (QIBs)" like large banks, mutual funds, and insurance companies, allowing them to privately raise money from investors instead of going through a public offering.

Only Qualified Institutional Buyers (QIBs), which are large, experienced investors with the knowledge and resources to make informed investment decisions, can participate in a QIP.

Benefits for companies:

Faster fundraising: Compared to a public offering, QIP is a quicker way to raise capital due to less regulatory hurdles.
Cost-effective: Lower costs associated with issuing shares through a QIP as compared to a public offering.
Control over investor base: Companies can carefully select the institutional investors they want to bring on board.
Minimal dilution: Since QIPs target large investors, the dilution of existing shareholder value is usually minimal.

In India, the Securities and Exchange Board of India (SEBI) regulates QIPs, setting rules for eligibility, pricing, and allotment.

The issue price of shares in a QIP is usually based on the company's average share price over a specific period.

About Indian Renewable Energy Development Agency Limited (IREDA)

It is a government-owned company that provides financial support for renewable energy projects.

It was established in 1987 and is a Non-Banking Financial Institution (NBFC).

It is under the administrative control of the Ministry of New and Renewable Energy (MNRE).

What does IREDA do?

Promotes, develops, and finances renewable energy projects
Supports energy efficiency and conservation projects.
Provides financial assistance for projects related to new and renewable energy sources.
Offers a range of financial products and services for renewable energy projects.
Supports battery energy storage systems (BESS) projects.