India’s state-backed Energy Efficiency Services Ltd. is delaying its initial share sale on expectations that an increase in its revenue will make the offering more attractive to investors. EESL, which is tasked with helping the nation reduce emissions, initially planned to launch its initial public offering as soon as the fourth quarter. It has now pushed back the IPO to the year starting April 2018 as it expects revenue to more than double to 30 billion rupees ($467 million), EESL Managing Director Saurabh Kumar said. “We are planning an IPO because we need more equity. Once we are in the market, it’s easier to raise more funds in India or abroad,” he said in an interview in New Delhi. With the higher revenue, “the enterprise valuation will then become significantly better than what it is now.” EESL, which is anchoring India’s energy efficiency programs from popularizing LED bulb use, installing smart meters to procuring electric cars, is a joint venture between India’s Ministry of Power and state-backed companies in the power sector such as NTPC Ltd., Rural Electrification Corp., Power Grid Corp. of India Ltd., Power Finance Corp., as well as the Bureau of Energy Efficiency. It plans to sell a 20 percent stake through the IPO to raise over 2 billion rupees, he said. It is also awaiting another round of investment from its founders that will raise the company’s equity capital to 10 billion rupees from 4.6 billion rupees now, Kumar said. The company has appointed a consortium of Axis Bank Ltd. and Trust Group as financial advisers.
Earlier this year, it said it would start supplying cut-rate LED bulbs in the U.K. as part of a 150 million pound ($200 million) investment program. It now plans to acquire a company with revenue of over 100 million pounds in the U.K. before March 31, he said, without elaborating. EESL will also help the International Solar Alliance — championed by India and France –conduct its first upcoming global tender for 300,000 solar pumps to be installed in various member countries. It is also pushing into electric cars. It issued an initial tender to procure 10,000 plug-in vehicles. Companies were invited to bid to supply 500 electric cars in the first phase by this year and the rest by next year. The vehicles will replace government cars operating in and around New Delhi.
While EESL will start delivering the first 500 electric cars it procured through a tender from Tata Motors Ltd. and Mahindra & Mahindra Ltd. in the next three weeks, demand for the remaining 9,500 electric cars from government departments remains unclear, he said. The company will operate these cars on a leasing model, charging 40,000 rupees a month for offering the electric vehicle along with a driver, he said.