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The Tata Power and 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.
BlackRock Real Assets, together with Mubadala, shall invest ₹4,000 crore (about $525 million) by way of equity / compulsorily convertible instruments for a 10.53 percent stake in Tata Power Renewables, translating to a base equity valuation of ₹34,000 crore.
5 distinct businesses
The final shareholding will range from 9.76 percent to 11.43 percent on final conversion. This newly created platform will consist of five distinct businesses delivering long-term, customer-oriented solutions.
The platform will house all renewable energy businesses of Tata Power including those in utility scale—solar, wind and hybrid generation assets; solar cell and module manufacturing; engineering, procurement and construction (EPC) contracting; rooftop solar infrastructure; solar pumps and electric vehicle charging infrastructure.
The broad-based portfolio of assets ensures diversified yet stable revenue sources including 25-year fixed-price PPAs for grid connected utility scale projects, Tata Power said in a release.
Tata Power Renewables has an approximately 4.9 GW of renewable energy assets. The proposed investment is expected to fund the company’s 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.
India is one of the world’s largest renewable energy markets and has recorded the fastest growing renewable energy supply with over 60 percent new capacity added over the past four years. Its 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 GDP growth and contribute to the government’s decarbonisation ambition, as well as support the macro energy transition trends in Asia and around the world.
Praveer Sinha, CEO and Managing Director, Tata Power Company, said, “The collaboration will support us to pursue exciting opportunities that lie ahead in the coming decades.”
The first round of capital infusion is expected to be completed by June 2022 and the balance funds will be infused by end of calendar year 2022. 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.
The transaction is subject to conditions precedent and customary regulatory approvals.
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