Tata Power to raise $400 mn through bonds

Tata Power is looking to raise as much as $400 million (Rs 1,300 crore) by issuing bonds abroad. It has appointed Deutsche Bank, Goldman Sachs and UBS as joint bookrunners.

These funds will be used to acquire coal assets internationally. Tata Power has been scouting for coal assets in South Africa, Indonesia and Australia.

“The company plans to expand its generation capacity through new power projects or acquisitions in the coming years. These funds could be utilised to secure further long-term coal supplies by investing in coal mines or assets outside India, as well as for repayment of existing loans,” Tata Power said in a statement.

The power producer is looking to raise money through 60-year bonds that are non-callable for the first five years. The terms of the transaction will be announced shortly.

“This long-term financing enhances our ability to achieve our strategic goals of securing sustainable sources of supply for our rapidly growing power generation base,” said S Ramakrishnan, executive director - finance, Tata Power.

The company said it hoped to raise $300 million to $400 million, but the final size will be determined by market demand. The fundraising will happen through a wholly-owned overseas subsidiary of Tata Power. The offering will be guaranteed by Tata Power.

Last month, another group company, Tata Steel, had raised Rs 1,500 crore through a perpetual bond issue.