ACME Solar Holdings IPO: Renewable Energy Giant Eyes Rs 2,900 Cr Public Issue; All You Need To Know

India's renewable energy company, ACME Solar Holdings Limited, is set to hit the primary market with its initial public offering (IPO) this week. The IPO, which opens for public subscription on Wednesday, November 6, and closes on Friday, November 8, seeks to raise Rs 2,900 crore.

Here's a detailed look at the ACME Solar IPO and what prospective investors need to know.

IPO Issue Size and Structure

ACME Solar's IPO aims to raise a total of Rs 2,900 crore through a combination of a fresh issue and an offer-for-sale (OFS) component. The fresh issue, valued at Rs 2,395 crore, will help the company fuel its growth and repay outstanding loans. Meanwhile, the OFS, worth Rs 505 crore, involves the sale of equity shares by the company's promoter, ACME Cleantech Solutions Private Ltd. With a face value of Rs 2 per share, the IPO lot size is set at 51 shares, with investors needing to buy in multiples of 51 thereafter.

IPO Subscription and Listing Dates

The IPO opens on November 6 and closes on November 8, with the shares expected to be allotted by November 11. Investors can look forward to a potential listing on the NSE and BSE, which is tentatively scheduled for November 13, 2024. The timing of this listing could prove advantageous as demand for clean energy investments rises.

Price Band and Anchor Round

The company has set its price band at Rs 275 to Rs 289 per share, offering potential growth for investors. Additionally, an anchor round for qualified institutional buyers (QIBs) is scheduled for November 5, a day before the public subscription opens, indicating strong early interest from institutional players.

Purpose of the IPO

The capital raised from ACME Solar's IPO will primarily be used to strengthen the company's balance sheet by repaying or prepaying part or all outstanding loans of its subsidiaries. The remaining funds will go toward general corporate purposes, providing the company with more flexibility.

Grey Market Premium (GMP)

As of the latest market report, ACME Solar's IPO commands a grey market premium (GMP) of Rs 30 per share. With the upper price band at Rs 289, the estimated listing price hovers around Rs 319, offering a 10.38% premium on the issue price. The grey market premium reflects the anticipated market demand, with investors willing to pay above the IPO price.

Investor Reservation Breakdown

The public issue has reserved shares across various investor categories:
Qualified Institutional Buyers (QIBs): At least 75% of the issue is reserved for QIBs.
Non-Institutional Investors (NIIs): Up to 15% of the shares are reserved for NIIs.
Retail Investors: Retail participants are allocated up to 10% of the total offering, while employees have shares worth up to Rs 10 crore reserved for them.

Industry Presence and Business Model

Established as a major renewable energy player in India, ACME Solar generates electricity through both solar and wind energy projects. The company's projects involve development, construction, ownership, operation, and maintenance, with revenue largely derived from electricity sales to government-backed entities at the central and state levels.

Market Potential and Focus

With a strong portfolio in India's renewable energy landscape, ACME Solar is well-positioned to benefit from India's clean energy transition. Government initiatives and global pressure to reduce carbon footprints have bolstered demand for renewable energy, making the timing of ACME's IPO highly strategic. The funds raised will enable the company to expand its operations and explore new projects in the renewable energy sector, aligning with India's 2030 renewable energy goals.

Merchant Bankers and Registrar

To handle this significant IPO, ACME Solar has brought in well-reputed institutions as book-runners, including Nuvama Wealth Management, ICICI Securities, JM Financial, Kotak Mahindra Capital, and Motilal Oswal Investment Advisors. Kfin Technologies Ltd has been appointed as the registrar for the IPO.

ACME Solar's IPO represents an opportunity for investors to participate in India's renewable energy boom. With strong backing from institutional investors and a solid GMP, this IPO offers both short-term and long-term potential. While investors are optimistic about the listing gains, the long-term outlook appears promising given ACME's strategic growth plans, stable revenue sources, and focus on clean energy.