For Renewable Units, Tata Power Seeking to raise $500 Million

Tata Power

Tata Power NSE -2.79% has once again grabbed attention of the world as it has initiated talks with sovereign asset and large pension managers which includes Government of Singapore Investment Corp. (GIC) and Canada Pension Plan Invest Board (CPPIB), to raise at best $500 million in advance of a prearranged initial public offering (IPO) by its renewable energy unit.

At formal stage, there is entry of negotiations just after the salt-to-steel corporation publicized that from the investors, including TPG, it was raising $1 billion by selling a smaller stake in the electric vehicle unit of Tata Motors.

In Tata Power Renewables, few of the self-governing funds from the Middle East and bulge-bracket funds from the United States are also discovering investments, people with experience told ET.

They also added, to find a buyer, Tata Power and Moelis & Co. are unstated to be working together to run a formal process.

One of them said, “In their engagement, they are getting formal and have appointed a banker. I think they are soon seeking to complete the transaction as from global funds there is lots of appetite towards green energy industries.”

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With its operational power assets, the company has also checked in the option to set up renewable energy infrastructure investment trust (InvIT).

GIC didn’t answer queries while Tata Power and CPPIB refused to comment.

Tata Powers is amongst India’s largest renewable energy businesses. The unit has an operational capacity of 2.6 GW encompassing wind and solar in a 32:68 ratio with presence in 11 states.

Keeping with present environmental sustainability focus and shift to clean energy is attracting a large number of investors interest, said experts. An executive close to the company said, “To bet on green energy, a visible change is witnessed in company’s big focus from traditional areas. And this strategy will make its businesses valuations better.”

Tata Power has said that by FY30, it looks forward to slowly eliminating coal-based capacity and developing its clean & green energy capacity to 80 percent.

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Recently, ET reported that the company has started its process of fundraising by bringing together its complete portfolio of renewables under an umbrella entity. This consist of operating and pipeline independent power producer (IPP) assets, engineering, procurement & construction (EPC), panel manufacturing, microgrids, rooftop solar, and charging stations. Its goal is to raise equity for the complete platform, start over efforts of fundraising for renewable business six months right after drawing out of discussions with Malaysia’s Petronas for investments of nearly $2 billion.

In June, Tata Power Renewables credit rating was upgraded to stable by ICRA and this reflected its forte rising from heterogenous renewable power portfolio in 11 states, it said.

In recent years, from financial investors, substantial fund inflows are observed for renewable energy space.

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