ReNew Energy Global announces a share buyback worth $250 million

ReNew Energy Global (ReNew), the listed parent of Indian renewable energy company ReNew Power, has announced a share buyback worth $250 million just six months after getting listed on the Nasdaq index in the US.

In an exchange notification, ReNew said its board has authorised a new $250 million share repurchase program to buy back Class A ordinary shares.

The stock price of ReNew has fallen from its listing price of $11 apiece in August to $6.26 currently, which is a slight recovery from the low of $5.06 apiece it hit in December.

Moody’s Investors Service in a recent note said the share buyback is “credit negative” for ReNew Power. The extent of the credit impact of the buyback will depend on whether ReNew will spend the entire amount announced, and if the initiatives identified by its management to restore its liquidity buffer can be successfully executed within a timely manner, Moody’s said.

The company said the share repurchase would be funded through cash received from the recent sale of its solar rooftop portfolio. The notification also said the company is evaluating “further offers to sell minority interests of assets at similar indicated valuation multiples”.

Spencer Ng, vice-president, Moody’s Investors Service, said, “ReNew has sufficient cash to fund the planned buyback, having raised $610 million of equity in August 2021, but the transaction will reduce the liquidity headroom available within its existing capital structure to absorb further delays in revenue collection or to fund its growth projects if capital market conditions remain volatile.”

In its preliminary results posted on Nasdaq, ReNew reported adjusted Ebitda of Rs 4,245 crore for the nine months ended December 31, 2021, and Rs 1,055 crore for Q3FY22.

The firm’s gross debt as on December 31 stood at Rs 41,100 crore.

Sumant Sinha, chairman and chief executive officer of ReNew, said in the exchange statement, “This stock repurchase illustrates our confidence in the strength and resilience of our business model as well as our long-term growth prospects. Given our robust balance sheet and strong cash flow generation, the flexibility to opportunistically repurchase shares while concurrently executing our growth plan underscores our commitment to a shareholder enhancing, returns focused capital allocation strategy.”

ReNew took the special purpose acquisition company (SPAC) route to get listed on the Nasdaq last August.