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 Ltd (TPREL).
The agreement will have the following impact:
- BlackRock Real Assets, together with Mubadala, shall invest Rs.4,000 crore (around $525 million) by way of equity/compulsorily convertible instruments for a 10.53 per cent stake in Tata Power Renewables, translating to a base equity valuation of Rs.34,000 crore. The final shareholding will range from 9.76 per cent to 11.43 per cent on final conversion. Currently Tata Power Renewables is a wholly-owned subsidiary of Tata Power.
- The newly-created platform will house all the renewable energy businesses, namely: utility-scale solar; wind & hybrid generation assets; solar cell & module manufacturing; 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, a release from Tata Power said.
- Tata Power Renewable Energy Ltd will thus become the holding company of all existing and future green energy-related businesses of Tata Power.
- The investment of Rs.4,000 crore will be made in two tranches. In the first tranche, Rs.2,000 crore worth of equity shares will be issued at a price of around Rs.235.38 per share. In the second tranche, 200 million compulsorily convertible preference shares of Rs.100 per share (total value: Rs.2,000 crore) to be converted at a price to be based on actual performance in FY23.
- The first tranche of investment is expected to close by June 2022, and the second by December 2022.
- The overall transaction also involves the transfer of a number of green energy-related assets and companies, currently owned by Tata Power, to TPREL. Some cases in point are: Tata Power Solar Systems Ltd, TP Saurya Ltd, Tata Power Green Energy Ltd, TP Roofurja Ltd, etc.
Current green portfolio of Tata Power
As of March 31, 2022, the indicative green business portfolio of Tata Power was as follows:
- Generation capacity: around 4,900 mw, including 1,200 mw under construction. This covers utility-scale solar, wind, hybrid, energy storage and group captive
- Large-scale solar EPC orders: around 3,250 mw; letter of award awaited for around 2,000 mw. This includes Tata Power’s own projects.
- Manufacturing capacity: 650 mw per year of solar modules, and 550 mw per year of solar cells.
- EPC orders for solar rooftop: around 553 mw
- Solar rooftop PPAs: around 73 mw, including projects under construction
- Solar pumps installed: around 28,500 units, including government tenders and direct consumer sale
- EV charging points: 13,107 (private, home); 136 (captive, fleet); 1,871 (public) and 212 (for buses). Footprint of charging points is spread across 190+ cities.
Also read: Tata Power Renewables Commissions 300-Mw Solar Project At Dholera
Overall objective
The overall aim of this Rs.4,000 crore investment is 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.
Featured diagram shows the new structure of Tata Power’s green energy business, post equity investment from BlackRock. (Source: Investor presentation by Tata Power). Note: TPREL = Tata Power Renewable Energy Ltd; TPSSL = Tata Power Solar Systems Ltd.
