New Delhi, Aug. 31 -- A green energy company backed by Norwegian sovereign wealth fund Norfund is lining up fresh capital, even as its public listing plans continue to run behind schedule, VCCircle has learnt.
This comes nearly 10 months after the company filed its draft prospectus with the Securities and Exchange Board of India (SEBI) for an initial public offering (IPO) of Rs. 4,575 crore (around $480 million at current exchange rates).
The fresh capital is being infused into Punjab-based SAEL Industries Ltd by the company's own promoters, who are set to pump in close to Rs 200 crore (around $21 million) over the next few months. The interim call is meant to tide the business over near-term equity requirements for its under-construction capacity at a time when its ability to raise money from the public markets-or from new investors-has become critical to keeping its expansion plans on track.
It is unclear how much more money, if any, may be infused by investors other than the promoters.
Norfund first backed SAEL in February 2023.
The company had secured a final approval for the listing from the market regulator in March. However, several months on, the offering is yet to launch, though it is unclear exactly how much delay it may eventually face.
VCCircle has learnt that the extended wait is beginning to weigh on the company's overall funding position, given the scale of equity commitments tied to projects currently being built out.
SAEL's under-construction portfolio stands at roughly 2,330 MW, most of it requiring further equity infusion before these projects can be commissioned. Of this, about 600 MW has already slipped past its original commercial operations target of June 2027 on account of pending tariff approvals from state utilities-an added complication for a company racing to scale up capacity across solar and waste-to-energy verticals.
VCCircle has learnt that the promoters' fresh capital is intended only to cover requirements over the next few months, and that a full-fledged IPO or a substantial round from existing or new institutional investors remains essential to meet the company's larger funding needs.
SAEL is estimated to require another Rs 1,000-1,100 crore of equity in the current fiscal year alone for projects slated to come online in fiscal year 2028, on top of roughly Rs 1,900 crore of equity commitments tied to a further 1,050 MW of solar-plus-storage capacity for which power purchase agreements are yet to be signed. A separate Rs 1,500 crore or so is expected to go toward the company's solar module and cell manufacturing expansion-a roughly Rs 5,200 crore capex programme to add 5 gigawatt (GW) each of cell and module capacity by fiscal 2029, funded via a mix of debt, internal accruals and fresh equity.
Liquidity crunch
On the liquidity front, the company held free cash of about Rs 223 crore at the consolidated level as of June this year, along with an undrawn credit facility of Rs 50 crore.
The company has been looking to build a liquidity cushion large enough to cover roughly six months of debt servicing across the group, using proceeds from the IPO-a plan that too now hinges on when the listing eventually goes through.
A further slippage beyond the end of this calendar year could start to weigh more meaningfully on the company's credit standing, according to a recently released ratings report.
One investment banker who tracks IPOs said the renewable energy sector as a whole has not been getting much traction from public market investors of late.
IPO overhang
SAEL had filed its draft red herring prospectus with SEBI in November last year, proposing the Rs 4,575-crore offering comprising a fresh issue of Rs 3,750 crore and an offer for sale (OFS) worth Rs 825 crore.
The OFS component was entirely earmarked for Norfund, which was looking to pare down a significant chunk of the stake it had built in the company, as reported by VCCircle at the time.
The company's promoters-Jasbir Singh, Sukhbir Singh and Laxit Awla-together held a little over 99% of SAEL on an as-is, pre-conversion basis going into the IPO process.
Norfund's investment has been made largely through compulsorily convertible preference shares that convert into equity only around the time of listing, which is why the Scandinavian sovereign wealth fund's effective stake works out to a little over 19.7% on a fully diluted, as-converted basis rather than showing up in the pre-conversion capital structure.
In December last year, the income tax department also conducted group-wide search-and-seizure operations against SAEL and its parent SAEL Ltd.
It could not be ascertained whether this has had any bearing on the pace of the listing.
An email and a text message sent to Laxit Awla remained unanswered till the time of publishing this article. A spokesperson for SAEL acknowledged receiving the email queries, but offered no comment till the time of publishing this story.
Institutional backing
The company counts Norfund and the US International Development Finance Corp (DFC) among its marquee institutional backers, with the two DFIs having collectively put in close to $165 million into SAEL to date.
Norfund holds board representation through a nominee director as well as an observer, while DFC has an observer seat. DFC came in in February 2024 and, unlike Norfund, was not looking to sell any part of its holding via the proposed IPO.
Emails sent to the spokesperson of DFC remained unanswered till the time of publishing this story. Norfund declined to comment.
SAEL, incorporated in 2022 as the flagship entity of the SAEL group, offers end-to-end renewable energy solutions spanning solar module manufacturing, engineering, construction and maintenance of power projects, besides operating one of India's largest agri waste-to-energy portfolios. It currently operates about 2,086 MW of AC capacity-roughly 1,921 MW of solar and 165 MW of waste-to-energy-with the bulk of it having come online only over the past year.
The company also runs two solar PV module manufacturing lines with a combined capacity of about 3,625 MW, besides the 5 GW-plus-5 GW cell and module expansion under way, and 11 biomass plants across Punjab, Haryana and Rajasthan that together process nearly 2 million tonnes of agricultural waste annually.
The IPO is being managed by Kotak Mahindra Capital Company, JM Financial, Ambit and ICICI Securities.
Published by HT Digital Content Services with permission from VC Circle.