ReNew Power pins hopes on Nasdaq listing for funding need till FY25

ReNew Power plans to take advantage of environmental, social and governance (ESG) investment that has caught on globally once it is listed on the Nasdaq, and is looking to meet its equity requirements till financial year 2024-25 (FY25) through this route.

In 2018, the firm had filed for an initial public offering (IPO) in India, but it was called off. The company is now taking the ‘special purpose acquisition company (SPAC)’ route to list at a valuation of $8 billion.

Speaking to Business Standard, Sumant Sinha, founder-chairman and chief executive officer, ReNew Power, said: “Global markets are very deep and the whole theme of ESG investment has picked up globally. Therefore, we have access to new funds and investors who otherwise would have not been able to invest in the Indian listing.”

Last week, ReNew announced the execution of a definitive agreement with RMG II for a business combination that would result in ReNew becoming a publicly listed company on the NASDAQ.

In an investor call by ReNew and RMG, the firm said it expects revenues to grow 30 per cent until 2025. By FY22, ReNew expects revenue of $952 million, and is looking to more than double the same to $2 billion by 2025.

“In terms of Ebitda (earnings before interest, taxes, depreciation, and amortisation), for FY21, we expect to end with $578 million and in FY22, we expect to end with $811 million in Ebitda. Worked through the numbers for FY25, we expect to end with $1.7 billion in Ebitda,” said D Muthukumaran, chief financial officer, ReNew Power.

The firm hopes net Ebitda will rise to 86 per cent from 85 per cent.

Sinha said the company’s Ebitda margin has been in the 84-86 per cent range. “This year, it has been marginally lower (83 per cent) due to some factors,” he said.

ReNew also mentioned in the investor call that it is expecting capex reduction with revenue growth. “Capex reduction is happening primarily because capex cost on a per Mw (megawatt) basis is going down due to technology improvements. Capital cost is going down in solar over the years, so over 2-3 years forward-looking basis, capex will continue to go down… In wind also, as turbines improve, the cost per unit generated will go down, though cost per Mw might not,” Sinha said.

ReNew, promoted by Goldman Sachs, is backed by equity investors like Tokyo-based JERA, Abu Dhabi Investment Authority, Canada Pension Plan Investment Board, and Global Environment Fund. The holding of these investors, which is currently at 100 per cent of ReNew, is expected to reduce to 70 per cent approximately after the transaction is completed.

“We’re coming to market with an approximately $4.4 billion post money equity valuation after the upsizing of the ‘Private Investment in Public Equity’ (the PIPE), and an $8 billion enterprise value, both of which, reflect a very compelling valuation relative to the peer set,” said Bob Mancini, CEO and director, RMG II, during the investor call.