Inox Green Energy to raise up to Rs 1,000 crore via preferential allotment, warrants

Inox GreenEnergy Services, which provides operations and maintenance (O&M) services to wind power operators, plans to raise Rs 800-1,000 crore through a combination of preferential allotment and issuance of warrants to fund future acquisitions, according to multiple sources familiar with the matter. The company is aggressively looking at O&M assets of 10 gigawatt capacity that are currently managed by idle or financially stressed entities.

A formal announcement of the fundraise is expected in the next few days. An email sent to Inox Green remained unanswered at the time of going to press.

Inox Green plans to issue preferential allotment and warrants totalling Rs 500-600 crore to four-five global and local investors, including a London-based fund. The remaining funds will be raised through warrants issued to the company’s promoters. The promoter group led by Devansh Jain held a 55% stake through Inox Wind till March 2024. The move is aimed at increasing the promoter’s stake to instill more confidence among long-term investors about the company’s business prospects.

The company is currently in talks with a few O&M firms and several independent power producers to secure contracts to manage their operating assets, a move that could potentially double its installed capacity within the next year. Inox Green Services is India’s only listed pure-play company focused on renewable O&M services, managing 3.2 GW of assets.

As of now, Inox Green Services has a market cap of Rs 4,160 crore, and its stock has gained nearly 41% in the last six months. The primary objective of the proposed fundraise is to acquire companies, which will increase Inox Green Services’ target capacity to 6 GW by FY26. During a post-earnings conference call in March 2024, the company mentioned exploring various opportunities and indicated that disclosures would be made at the appropriate time. In the long term, it aims to reach a capacity of 10 GW within the next three-four years.

Inox Green generates revenue of Rs 8 lakh for every 1 MW of O&M services, indicating that a cumulative O&M service contract for 5 GW could potentially generate revenues of Rs 400 crore. The O&M business operates on an asset-light model and is able to achieve EBITDA margins in excess of 50% under steady-state conditions. In FY24, Inox Green Services achieved 96% machine availability for its managed assets. Under O&M contracts, the company undertakes maintenance of wind turbines, generators and general infrastructure over a period of 5 to 20 years. Inox Green’s revenue grew 10% year-on-year to Rs 261.1 crore in FY24 as compared to Rs 237 crore