Tata renewable arm raises Rs 4,000 crore from BlackRock, others

Investors, including Mubadala, to get 10.53% stake

The Tata group’s power unit on Thursday said it was raising Rs 4,000 crore (or $525 million) from a consortium of investors, including BlackRock and Mubadala, to scale up its renewable energy business. The investor group will get a 10.53 per cent stake in Tata Power Renewable Energy for the money injected by way of equity and compulsorily convertible instruments, Tata Power said.

The company has entered into a binding agreement with the Blackrock-led consortium to invest in the subsidiary at a base valuation of Rs 34,000 crore ($ 4.5 billion). The objective, it said, was to create a comprehensive energy platform.

“The collaboration will support us to pursue exciting opportunities that lie ahead in the coming decades,” said Praveer Sinha, chief executive officer and managing director, Tata Power.

The capital infusion would be done in two rounds, the company said in a conference call, with the first round to be completed by June 2022 and the other by the end of the year.

The investors’ final shareholding would range from 9.76 per cent to 11.43 per cent upon conversion, valuing the company between Rs 35,000 and Rs 41,000 crore, according to analysts. The newly created energy platform would have five distinct verticals: Utility scale solar, wind and hybrid generation assets; solar cell and module manufacturing; engineering, procurement and construction (EPC) contracting; rooftop solar infrastructure; and solar pumps and electric vehicle charging infrastructure.

Tata Power, the country’s largest integrated power company, has earlier said it intends to phase out coal-based capacity and expand its clean and green capacity to 80 per cent by FY30.

The renewable energy space has seen heightened activity in recent years, as energy companies in India and the world look to tap the sector amid the shift from fossil fuel-based energy sources to clean energy. While the Tata-Power-BlackRock deal ranks among the top 10 transactions in the sector, the largest deal so far is that of Adani Green’s acquisition of SB Energy India, owned by Softbank and Bharti Enterprises, in 2021 for nearly Rs 26,000 crore ($3.5 billion).

ReNew Power had snapped up Ostro Energy for Rs 10,800 crore ($1.6 billion) in 2018 as it sought to consolidate its presence in the sector.

Tata Power said its broad-based portfolio of energy assets would ensure diversified yet stable revenue sources, including 25-year fixed-price power purchase agreements (PPAs), for grid-connected utility scale projects.

The company's renewable energy unit currently has around 4.9 gigawatt (GW) of renewable energy assets, which it proposes to take to over 20 GW in the next five years. The company is also looking to become a key player in the rooftop and electric vehicle charging space in the next few years.