Blackrock, Mubadala to invest in Tata's renewable arm via rights issue

Unlisted firm Tata Power Renewables Energy plans to raise Rs 6,000 cr; Both Blackrock and Mubadala had invested $525 million this April for 10.5% stake

Tata Power Renewables Energy, the unlisted subsidiary of Tata Power, is planning to raise Rs 6,000 crore from its shareholders including its key investors BlackRock Real Assets, and Mubadala Capital, an Abu Dhabi based based fund, by way of a rights issue.

Both Blackrock and Mubadala had invested $525 million in April this year to pick up 10.5 per cent stake translating to a base equity valuation of Rs 34,000 crore in the company. The final shareholding of both investors will range from 9.76 per cent to 11.43 per cent on final conversion of equity and compulsory convertible bonds in the renewable power firm and will participate in the rights issue.

On Tuesday, the Tata Power Renewables Energy board decided to issue and allot up to 291 million shares at Rs 206 (including premium of Rs 196) each for an aggregate amount of Rs 6,000 crore on a rights basis. Among the firm's peers, Adani Green Energy is trading at Rs 2,079 a share with a total market capitalisation of Rs 3.29 trillion.

The issue proceeds will be used to grow the company's portfolio as it aims a capacity of over 20 Gw of renewables assets and a market leading position in the rooftop and electric vehicle charging space across India.

The company's operational projects are located  across 12 states and most of its operational capacity of about 76 per cent is contracted to state utilities, while the rest is allocated to central utilities and captive use. Of TPREL's 3.2 Gw operational capacity, including capacity acquired from Welspun, around 77 per cent is solar, while the rest is wind. The entire under-construction portfolio of 1.52 Gw is solar. For the fiscal ending March this year, the company reported profit of Rs 441 crore on revenues of Rs 1,277 crore.

The company will face steep competition from the Adani group and Reliance Industries, who have planned billions of dollars of investment in the renewable energy sector. The Adani group plans to invest a massive $70 billion in green energy business in the next eight years while Reliance plans to invest $10 billion by 2025.

India will require investments of $223 billion between 2022-2029 to meet the  wind and solar capacity targets. India is one of the world’s largest renewable energy markets and has recorded the fastest growing renewable energy supply with over 60% new capacity added over the past four years. Its installed renewable capacity is expected to grow from 150 Gw currently to 500 Gw by 2030.

Tata Renewable Energy: Financials

2022:

Revenues: 1,277 cr

PAT: 441 cr

2021:

Revenues: 1,181 cr

PAT:  320 cr

Source: Care Ratings