Tata Power ups fund raising plan to $450 mn

Tata Power today said it plans to raise $450 million by issuing corporate hybrid securities, revising its target upwards from $300-400 million.

The proceeds could be used for securing long-term coal supplies and repaying debt.

The decision to set higher target might have stemmed from bullish market conditions, according to analysts. The company on April 18 had announced its plan to raise $300 million to $400 million by issuing corporate hybrid securities.

Tata Power's subsidiary, Bhira Investments, would raise the fund worth $450 million and offer 8.5% rate of interest, payable every six months.

"(Bhira) has successfully priced a 60-year non-callable for 5 years Reg S hybrid capital offering of $450 million guaranteed by Tata Power, at 8.5% per annum, payable semi-annually," Tata Power said in a regulatory filing.

A hybrid security has characteristics of both debt and equity and the securities allow higher flexibility for corporate financing while reducing capital costs for issuers.

The pricing was finalised on April 19. Deutsche Bank, Goldman Sachs and UBS AG have been appointed as joint book runners, the filing said.

Tata Power's Executive Director (Finance) S Ramakrishnan had said that the long-term financing would enhance company's ability to secure sustainable supply sources for its growing power generation base.

The company has over 3,100 MW power generation capacity through thermal, hydro, solar and wind energy sources. Work on adding 5,500 MW capacity is in progress.

Tata Power's shares closed today at Rs 1,326.10 on the Bombay Stock Exchange, up 2.08% from its previous close.