Tata Powers in talks to raise $600-700 million for its renewable energy business

Tata Power is said to be in talks with investors Canadian Pension Plan Investment Board (CPPIB) as well as Singaporean sovereign fund Temasek Holdings and private equity firm General Atlantic to raise as much as $600-700 million (Rs 4478 crore – 5225 crore) for the renewable energy business. The equity valuation planned is $6-7 billion.

The deal is at an advanced stage and is likely to be concluded in the coming weeks.

The asset monetization of renewable energy will help the salt-to-steel conglomerate meet long term targets. Last year, Tata Power decided to club its entire renewables portfolio under an umbrella entity – which includes operating power resources in the pipeline, charging stations, rooftop solar, microgrids, and panel manufacturing.

According to rating agency ICRA, Tata Power has one of India’s major renewable energy businesses with an operating capacity of 2.6 GW comprising wind and solar in a 32:68 ratio spread across 11 states. It has set targets to setting up renewable capacity of 15 and 25 GW by FY25 and FY30, respectively. It also aims to set up one lakh EV charging stations, with an eye on more than doubling-up the revenue the solar EPC revenue business to Rs 10,000 crore by the end of FY 25, from Rs 4100 crore at the end of FY-21 and increase the solar pump –used by farmers for irrigation– revenue to Rs 5000 crore in the next four fiscal years.

Tata Power Renewable had a total generation capacity of 2953 MW at the end of September 2021, compared with 2667 MW a year before in the same period, with a revenue of Rs 710 crore and profit of Rs 156 crore, according to Tata Power’s quarterly arrangement released after the second-quarter earnings.

Tata Power Renewable Energy had an operating capacity of 2261 MW, consisting of 1710 MW of solar plants and 551 MW of wind plants, according to the company’s annual report of FY21 which had increased 2953 MW by September 30, 2021.

Among the operating assets, the corporation has the largest capacity in Karnataka with 517 MW, followed by 400 MW in Rajasthan, Andhra Pradesh with 306 MW and the equilibrium in other states.