GEF Capital set for 22x return on solar cell, module manufacturer Premier Energies IPO exit 

GEF Capital invested Rs 177 crore in the company in September 2021 for a 21 percent stake

In a span of just three years, climate-focused global private equity investor GEF Capital is set to make a return of almost 22 times on its Rs 177 crore-bet on Premier Energies, a maker of solar cells and modules, as the latter gets ready to make its public market debut.

Premier is launching its Rs 2,830-crore IPO (initial public offering) on August 27 and is looking at a price band of Rs 427-450 per share.

At the upper end of the price band, GEF’s total holding in the company -- 88.63 million shares or a 21 percent stake - is worth Rs 3,988.45 crore, leading to an impressive return of 22.5x on its investment of Rs 177 crore in the company, in just three years.

GEF Capital will be selling around 30 percent of its shareholding in the company, or 27 million shares, which, at the IPO price, will fetch the investor Rs 1,215 crore.

The proposed IPO values Premier Energies Rs 18,992 crore (pre-money).

The sharp jump in valuation of the company in three years reflects the strong investor interest in the domestic manufacturing opportunity, driven by the China+1 theme.

Moneycontrol reported on March 12 that Indian solar panel makers are planning to raise large sums of capital this year through IPOs and pre-IPO rounds to fund their capex plans as they look to tap the growing domestic and export demand for solar modules.

Mumbai-based Waaree Energies filed draft papers for an IPO in December to raise Rs 3,000 crore to meet capex requirements, Moneycontrol had reported. Kolkata-based Vikram Solar has also raised around Rs 715 crore in a pre-IPO round from HNIs and family offices, as per media reports.

A massive domestic demand, government support for local manufacturing through productivity-linked incentive (PLI) schemes, and duties on cheap imports from countries, including China, are providing strong tailwinds for domestic solar module makers.

Premier Energies

Premier will raise Rs 1,291.4 crore from its IPO, with which it plans to part-finance the establishment of a 4 gigawatt (GW) Solar PV TOPCon Cell and 4 GW Solar PV TOPCon Module manufacturing facility in Hyderabad.

The facility is being set up at a total cost of Rs 3,358.32 crore. The company has tied a loan facility of Rs 2,225 crore from IREDA (Indian Renewable Energy Development Agency) for the project.

Read more about the IPO here

Currently, Premier Energies's manufacturing facilities have an annual installed capacity of 2 GW for solar cells and 4.13 GW for solar modules.

For the quarter ending June 30, Premier reported a revenue of Rs 1,668.7 crore and a profit of Rs 196.9 crore.