Workers past turbine operating at a wind farm in Hubli, Karnataka, India, on Wednesday, Feb. 23, 2022. India, the world's third biggest emitter of greenhouse gases, plans to more than triple its clean-energy capacity by the end of the decade and zero out emissions by 2070. Photographer: Dhiraj Singh/BloombergPhoto by Dhiraj Singh /Bloomberg

NTPC Green Energy's $1.2 Billion IPO Fully Sold on Last Day

The $1.2 billion initial share offering of the renewable-energy arm of top Indian power producer NTPC Ltd. was fully sold on the last day of its sale as investors clamor for exposure to the rapidly expanding sector.

by · Financial Post

(Bloomberg) — The $1.2 billion initial share offering of the renewable-energy arm of top Indian power producer NTPC Ltd. was fully sold on the last day of its sale as investors clamor for exposure to the rapidly expanding sector.

The demand for NTPC Green Energy Ltd. shares underlines the rush for new issuances in a country that’s been a global hotspot for dealmaking in recent months. The appetite for renewable energy stocks is particularly higher as the sector is a key part of the government’s ambitious net zero carbon agenda, with Waaree Energy’s $514 million IPO seeing a nearly 56% jump in its trading debut in Mumbai.

The sale comes against a weak market backdrop as foreign funds offload local shares. The indictment of billionaire Gautam Adani by US prosecutors and the rout of shares in his companies have also weighed on investor sentiment.

NTPC Green Energy raised about $469 million through anchor share allotment on Monday. The allocation saw participation from global money managers including Goldman Sachs, the Capital Group and T. Rowe Price Group Inc., while Singapore government and Abu Dhabi Investment Authority were among key investors.

The firm seeks to use the proceeds to invest in its subsidiary, focusing on India’s rapidly expanding power requirements, and repay loans taken by the unit, according to a draft prospectus.

The company’s shares are valued at 4.9 times their price-to-book value based on annualized financials for fiscal year 2025 and are fairly valued, according to Indian brokerage Geojit Financial Services. For the year that ended March 2024, NTPC Green’s shares held a price-to-book value of 15 times compared to its larger peer Adani Green Energy Ltd.’s shares that traded at 22 times. 

The brokerage recommended its clients to subscribe to the issue on a long-term investment basis, based on its strong brand recall, superior execution capabilities, portfolio expansions and investment in nextgen energy solutions.

—With assistance from Dave Sebastian.