Tata Power to explore M&A opportunities in renewable energy space

Tata Power, which plans to launch its renewable energy InvIT this fiscal, said it will also explore merger and acquisition opportunities to strengthen its position in this space.
 

According to an analyst presentation by the company, Tata Power, which is sitting on a debt of over Rs 43,000 crore, is eyeing Rs 9,000 crore revenues from its renewable energy operations by FY2025.  The company plans to launch the infrastructure investment trust (InvIT) this fiscal, post which it will explore merger and acquisition opportunities, considering the fragmented nature of the sector and the potential assets available, the presentation said.
 

According to the presentation, the company's total renewable energy portfolio stands at 4,152 MW, including 1,145 MW of solar assets under construction and another 370 MW won but awaiting letter of award.
 

Operational wind energy capacity is 932 MW.  The company is also hoping to increase its total renewable energy portfolio to 15,000 MW by FY2025.
 

The private sector power producer hopes to achieve the target through organic and inorganic expansion.
 

For organic growth, the company is eyeing the demand pipeline and expected capacity addition through bids from central agencies like SECI and NTPC and select state bids which have good payment track record, it said.
 

For Tata Power, the restructuring of the renewable business into an InvIT is part of the divestment process to bring its debt to Rs 25,000 crore by end of this fiscal from Rs 43,578 crore as of March 31, 2020, the document said.  The company has already embarked on the plans to clean its balance sheet by undertaking various debt reduction measures, including selling non-core assets.
 

The firm has already sold its stake in Cennergi Wind as well as ships owned by its Singapore subsidiary to raise around Rs 2,400 crore.  Tata Power reported a 10 per cent increase in consolidated net profit to Rs 268 crore for quarter ended June on the back of reduced expenses.
 

During April-June, the company reported a total income of Rs 6,540 crore as compared to Rs 7,874 crore in the year-ago quarter.