Unlisted firm Tata Power Renewables Energy plans to raise Rs 6,000 cr; Both Blackrock and Mubadala had invested $525 million this April for 10.5% stake

Tata Power Renewables Energy, the unlisted subsidiary of Tata Power, is planning to raise Rs 6,000 crore from its shareholders including its key investors BlackRock Real Assets, and Mubadala Capital, an Abu Dhabi based based fund, by way of a rights issue.

Move to aid Tata Group’s plan to quadruple renewables portfolio in 5 years

Tata Power said on Thursday that a BlackRock Real Assets-led consortium, including Mubadala Investment Company, would invest Rs 4,000 crore for a 10.53% stake in its renewable energy arm, under a binding agreement. The move is in sync with the Tata Group’s aim to more than quadruple its renewable energy portfolio to 20 giga watt (GW) from 4.9 GW at present.

The investment, via equity/compulsorily convertible instruments, would translate to a base equity valuation of Rs 34,000 crore. The first round of funds infusion by the investors is expected to be completed by June 2022 and the rest by the end of 2022. Post-conversion, the final shareholding will range from 9.76% to 11.43%.

Tata Power Renewables will now be the group’s comprehensive renewable platform covering five distinct businesses and delivering long-term, customer-oriented solutions, Tata Power said in a stock exchange filing.

Currently, Tata Group’s renewables business is housed in three firms – Tata Power Renewables, Tata Power Solar and Walwhan Renewables. As per the plan, the latter two will collapse into the former.

“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,” Tata Power said in a statement. “The broad-based portfolio of assets ensures diversified yet stable revenue sources, including a 25-year fixed-price power purchase agreement for grid-connected utility scale projects,” it added.

Under the new arrangement, Tata Power Renewables will house the group’s utility scale solar, wind & hybrid generation assets; solar cell & module manufacturing; engineering, procurement and construction contracting; rooftop solar infrastructure; solar pumps and electric vehicle charging infrastructure.

Tata Power CEO and MD Praveer Sinha said, “I am delighted to welcome BlackRock Real Assets & 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.”

Anne Valentine Andrews, BlackRock’s global head of real assets, said, “We are pleased to invest alongside Tata Power in this well-diversified and vertically integrated renewables business. With one of the largest portfolios of solar and wind assets in the country and a very experienced management team, Tata Power Renewables is at the forefront of India’s ambition to secure greater energy stability for its citizens.”

Khaled Abdulla Al Qubaisi, CEO-real estate and infrastructure investments at Mubadala, said, “As a responsible investor, Mubadala has a strong focus on renewable energy in multiple markets, so we are delighted to be co-investing with BlackRock Real Assets to help progress Tata Power Renewables’ ambitions in India.”

India is one of the world’s largest renewable energy markets and has recorded the fastest growing renewable energy supply with over 60% new capacity added over the past four years. The country’s installed renewables capacity is expected to grow from 150 GW currently to 500 GW by 2030, to satisfy India’s local energy demand driven by strong GDP growth. Renewables also contribute in great measure to the government’s decarbonisation ambition.

Moelis & Company is the financial advisor to Tata Power for the deal, 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.

Tata Power Renewables posted a standalone consolidated operating income of Rs 915 crore for the first nine months of FY22 against Rs 715 crore a year ago, and a PAT of Rs 51 crore compared with Rs 5 crore a year ago.

Tata Power Solar, the module manufacturing arm, reported a consolidated operating income of Rs 5,026 crore in the first nine months of FY22 against Rs 2,342 crore a year ago. PAT for the period was Rs 133 crore against Rs 72 crore a year ago. Walwhan Renewable saw an income of `886 crore for the first nine months of FY22 against Rs 876 crore a year ago, and a PAT of Rs 286 crore versus Rs 232 crore a year ago.

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