NTPC Green Energy plans $1.2 billion IPO

State-owned NTPC’s green arm, NTPC Green Energy, has filed draft papers for an initial public offering (IPO) to raise about $1.2 billion (about ₹10,000 crore). NTPC Green Energy, floated in 2021, was set up with the express purpose of a dedicated approach to green energy capacity creation for NTPC, which has a target of 60 GW of renewable energy by 2032.  After efforts to find a strategic investor were unsuccessful after a few attempts, it finally opted for an IPO. The issue also has a portion reserved for existing shareholders, lending strength to the parent firms stock price even before listing.

The IPO is well times, coming as it does when the market is not just booming, but particularly receptive to green energy firms. State backed firms including NTPC, SJVN, IREDA and more in the power sector are enjoying their best ever valuations historically, and IREDA itself has also launched plans for a Rs 4500 crore QIP issue. To that extent, the decision to opt for an IPO over a strategic investor seems to have paid off well for NTPC, which can expect a much higher valuation currently, with the possibility of fund raising at attractive valuations in the future as well if the price holds.

NTPC Green Energy is investing in solar and wind energy projects. Storage projects will also be added as it goes along. The company also proposes expansion into green hydrogen and green methanol aligned with the plan of India to enhance clean energy production and decrease carbon emissions as well. They are expected to add to NTPC’s broader mission of adding to sustainable energy.

The proceeds of the IPO will aid in funding the green projects that are currently ongoing and those on the papers. NTPC Green Energy’s green hydrogen and methanol projects are part of the far larger drive to discover substitute energy sources, which are placed to play a critical role in India’s energy transition. The money will also be used to retire debt taken by the parent firm to back green projects until now.