Azure Power Revises its IPO Down To $75 Million

Azure Power has revised its Initial Public Offering (IPO). With the revised filing, Azure Power plans to raise $75 million (~Rs.5 billion) in place of the previously proposed $140 million (~Rs.9.32 billion). This revision is in the wake of the company’s plan to raise $75 million (~Rs.5 billion) through a “concurrent private placement” with CDPQ Infrastructures, a wholly owned subsidiary of Caisse de depot et placement du Quebec, an institutional investor managing public and parapublic pension funds in Canada.

The company had previously decided to offer 6,818,182 equity shares priced between $21 (~Rs.1,399) and $23 (~Rs.1,532) to raise close to $140 million (~Rs.9.32 billion) through its IPO. According to the revised Securities and Exchange Commission (SEC) filing, Azure Power is currently offering 2,454,546 equity shares at the same price.

A source from Azure Power India (AZI) said that the company is revising its IPO as the $75 million (~Rs.5 billion) purchase by CDPQ will provide easy financing in a shorter time frame, if not the company would have had to wait for the shares to be sold on the New York stock exchange (NYSE). Azure Power has applied to list its equity shares on the NYSE under the symbol “AZRE.”

According to the Mercom’s India Solar Project Tracker, AZI has an operational capacity of 356 MW and a project pipeline of 664 MW. Azure Power intends to use the proceeds from the IPO to purchase equity shares of its India subsidiary, AZI, and to fund future operating expenses of Azure Power. Barclays and Credit Suisse are acting as joint book-running managers of the offering. Roth Capital Partners is acting as a co-manager of the offering.

Some highlights from the SEC F-1 filing:

The company has incurred losses since inception, including a net loss of $24.4 million (~Rs.1.62 billion) for fiscal year 2016. The company believes it will continue to incur net losses due to continued significant investments in solar projects.

Project-Level Financing Arrangements

Borrowings include project-specific financing arrangements collateralized by the underlying solar power projects. At June 30, 2016, these borrowings had annual interest rates ranging from 4.07 percent to 6.43 percent for foreign currency loans and from 11.40 percent to 12.50 percent for Indian rupee term loans and 13.25 percent for short term loans. Here are the project-level financing arrangements as of June 30, 2016:

“The stock market has not been kind to solar companies since the second quarter of 2015. Very few solar company stocks are in positive territory post IPO. High debt levels and lack of profitability have been the primary reason for investors to pull back from investing in solar public companies. The impact of SunEdison’s bankruptcy has not helped either," commented Raj Prabhu, CEO and Co-Founder of Mercom Capital Group.

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