Tata Power plans to launch renewable InvIT by March 2021
Tata Power Company, India’s largest private sector power producer, plans to launch its renewable InvIT by March 2021.
According to company sources, the entire renewable portfolio of 2500 MW operational and 600 MW of under construction renewable projects will be moved into the InvIT. “We are evaluating whether it will be a public or a private InvIT and hopefully by the end of September, we will have the definitive term sheet. Our plan is to complete the invIT in its entirety by the end of FY21,” the firm sources said.
Tata Power sees restructuring of the renewable business into an InvIT as a divestment process along with the sale of non-core assets since the company plans to sell its stake in the renewable business and get an equity for it.
“We will transfer the entire renewable debt of close to Rs 12,000 crore into the InvIT and it will be totally off the Tata Power’s balance sheet,” the sources added.
At present, Tata Power has a 2500 MW of operating renewable capacity, while 600 MW is under construction. Of the total capacity, around 1100 MW is wind and the rest is solar.
The company plans to keep its capital expenditure plan to a bare minimum till the balance sheet improves. The power producer has a total debt of close to Rs 41,000 crore as of June 30, 2020, and has undertaken various debt reduction plans including sale of non-core assets.
In 2020, Tata Power has raised close to Rs 2,400 crore by selling two non-core assets, first the South African Cennergi Wind, and another the sale of ships in its Singapore subsidiary.
“We are in advanced stage of discussion for the sale of 126 MW hydro project in Zambia and are hopeful to achieve the foreclosure of the transaction in the October-December quarter and get the money roughly around $100 million by the end of the year itself,” sources added.
The company, which is planning to have 50% renewable capacity by 2030, expects the sale of 189 MW hydro power project in Georgia to fetch another $100 million in FY22. The sale of Baramulti Suksessarana (BSSR) mine in Indonesia is also expected to fetch around $100 million and expected to be completed by FY21.
Tata Power is also reducing the total number of subsidiaries from 95 to 50 and has undertaken merger of three of its subsidiaries, including Coastal Gujarat Power (CGPL). This merger is likely to reduce the cost of funds for CGPL by 100 basis points due to strong balance sheet of Tata Power, the sources said.