In a significant move to tap the growing appetite for green energy investments, Hero Future Energies IPO has appointed four leading investment bankers, aimed at raising INR 5,000 crore.
The renewable energy arm of the Hero Group has mandated JM Financial, Axis Capital, Nomura and Bank of America to manage the share sale, said people in the know. The fundraising target has been upsized from the earlier planned INR 3,500 crore to INR 5,000 crore after positive feedback from ESG focused investors.
Strong Backing and Strategic Shareholding Changes
Backed by global private equity major KKR and the International Finance Corporation (IFC), HFE is positioning itself as a key player in India’s clean energy transition. External shareholders KKR and IFC will pare down part of their holding through the offer while the Munjal family, founders and controlling shareholders of the company will retain a significant stake.
Expansive Renewable Energy Portfolio
Hero Future Energies, set up in 2012, has a renewable energy portfolio of 5.2 GW with assets in India and international markets including the UK, Ukraine, Singapore, Vietnam and Bangladesh.
Domestic portfolio includes:
- Wind capacity of over 583 MW across Rajasthan, Maharashtra, Tamil Nadu, Karnataka, Madhya Pradesh and Andhra Pradesh
- Solar capacity of over 1,576 MW in Madhya Pradesh, Telangana, Andhra Pradesh, Karnataka and Rajasthan
Stable Revenue Streams and Risk Mitigation
A recent Crisil report highlighted the company’s diversified asset base and strong counterparties. Around 43% of the company’s power offtake is secured through long term agreements with the Solar Energy Corporation of India (SECI). The rest is sold directly to state distribution companies and private industrial clients including members of the Hero Group itself.
This spread not only gives stability to revenue but also reduces credit risk.
Hero Future Energies IPO – Solid Financials
The company’s financials are strong with reported EBITDA of around USD 150 million (~INR 1,250 crore) for FY24 showing steady operational performance in a rapidly changing energy market.
Growth Plans Ahead
Hero Future Energies made its debut fundraising in 2017 when IFC invested USD 125 million. This was followed by a big ticket investment of USD 450 million in 2022 from KKR and the Munjal family.
Going forward, HFE has big plans with Chairman Rahul Munjal saying last year that the company will invest USD 20 billion in renewable energy projects including solar, wind and battery storage by 2030.
IPO to Boost India’s Clean Energy Push
The IPO will be a milestone not just for Hero Future Energies but for India’s overall renewable energy space as investors look to align their portfolios with sustainability goals. The offer will follow closely on the heels of Ather Energy, another Hero Group company in the fast growing electric mobility space.