The Indian Renewable Energy Development Agency (IREDA) has successfully raised ₹453 crore through the issuance of perpetual bonds, marking another milestone in its efforts to mobilise long-term capital for India’s clean energy push. The offering witnessed a robust response from investors, attracting bids worth ₹1,343 crore, against a base size of just ₹100 crore and a green shoe option of ₹400 crore. This translated into an oversubscription of nearly 2.7 times, underscoring the strong investor confidence in IREDA’s financial strength and its role in the renewable energy ecosystem.
Strengthening Capital Base for Green Financing
Commenting on the development, Pradip Kumar Das, Chairman and Managing Director of IREDA, noted that the proceeds will directly contribute to bolstering the company’s Tier-I capital, enhancing its ability to expand lending towards renewable energy projects. “These bonds will strengthen our capital base and enable us to scale up financing in the renewable energy sector, thereby accelerating India’s transition to a greener and more sustainable future,” Das said.
Unique Features of Perpetual Bonds
Perpetual bonds are distinctive instruments that combine debt and equity-like features. Unlike conventional bonds, they carry no fixed maturity date or mandatory redemption, giving issuers long-term capital flexibility. The bonds are callable only at the discretion of IREDA, typically after a defined lock-in period.
In this issuance, investors will receive an annual coupon of 7.70%, with a 50 basis point step-up provision applicable once during the lifetime of the instrument, in case the bonds are not called after 10 years. This structure balances the interests of both the issuer and investors by providing attractive returns while ensuring stable funding for IREDA.
Hybrid Instrument with Long-Term Benefits
IREDA highlighted that perpetual bonds, being hybrid instruments, strengthen its balance sheet by acting as quasi-equity. This not only improves the company’s capital adequacy ratio but also secures a steady and reliable pool of long-term funds. Such funding avenues are critical for an organisation like IREDA, which plays a pivotal role in financing renewable projects across solar, wind, hydro, and emerging green technologies.
Boost to India’s Green Transition
The successful issue reflects the growing appetite of institutional investors for green-aligned financial products and confidence in IREDA’s creditworthiness. By reinforcing its capital position, IREDA is better placed to scale up lending to renewable developers, thereby contributing significantly to India’s ambitious targets of 500 GW renewable capacity by 2030 and the overall net-zero pathway.
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