Tata Power to raise ₹4,000 crore to boost renewable energy biz

Tata Power Company has announced to raise ₹4,000 crore from two foreign investment firms – BlackRock and Mubadala – to fund growth of its renewable energy business. The company said that the funds will be used to create India’s most comprehensive renewable energy platform.

“BlackRock Real Assets-led consortium, including Mubadala Investment Company, have entered into a binding agreement to invest in Tata Power’s renewable energy subsidiary, Tata Power Renewable Energy,” the company said in an exchange filing on Thursday.

As per the filing, BlackRock Real Assets, together with Mubadala, will invest ₹4,000 crore by way of equity or compulsorily convertible instruments for a 10.53% stake in Tata Power Renewables, translating to a base equity valuation of ₹34,000 crore. The final shareholding will range from 9.76% to 11.43% on final conversion, it said.

The transaction is expected to close in the next 2-3 months, subject to requisite approvals. The first round of capital infusion is expected to be completed by June 2022 and the balance funds will be infused by the end of the calendar year 2022.

Tata Power Renewables is one of the largest renewable energy companies in India. Its vertically integrated operations currently have around 4.9 gigawatt (GW) of renewable energy assets.

“The proposed investment is expected to fund Tata Power Renewables’ aggressive growth plans. Over the next five years, Tata Power Renewables aims to achieve a portfolio of over 20 GW of renewables assets and a market leading position in the rooftop and electric vehicle charging space across India,” says the company.

The energy major further stated that the newly created platform will consist of five distinct businesses delivering long-term, customer oriented solutions. It will house all renewable energy businesses of Tata Power including those in utility scale solar, wind & hybrid generation assets; solar cell & module manufacturing; engineering, procurement and construction (EPC) contracting; rooftop solar infrastructure; solar pumps and electric vehicle charging infrastructure.

Commenting on the development, Praveer Sinha, CEO and Managing Director, Tata Power Company said: “Tata Power Renewables is an industry leader with a broad and deep portfolio of next-generation renewables businesses well placed to scale up rapidly based on its strong and consistent performance over the years. I am delighted to welcome BlackRock Real Assets and Mubadala to join us to take the renewables business to the next level of growth. The collaboration will support us to pursue exciting opportunities that lie ahead in the coming decades.”

Moelis & Company is the financial advisor to Tata Power, while JP Morgan is the financial advisor to BlackRock Real Assets. Cyril Amarchand Mangaldas & Co are legal advisors to Tata Power while Slaughter & May and AZB Partners are legal advisors to BlackRock Real Assets.