New Delhi: Malaysia’s state-run oil and gas company, Petroliam Nasional Bhd or Petronas is looking to acquire around 10% stake in Tata Power Renewable Energy Ltd (TPREL), said four people aware of the development.
This marquee minority stake sale in TPREL is in addition to Petronas’ interest in investing in Tata Power’ renewable energy infrastructure investment trust (InvIT).
InvITs manage income-generating infrastructure assets, typically offering regular yield to investors and a liquid way to invest in infrastructure projects.
TPREL is a wholly-owned subsidiary of The Tata Power Company Ltd and its primary investment vehicle in clean energy space. Citibank has been given the mandate to find an investor for the Tata Power renewable energy InvIT, which will house 3 gigawatt (GW) of renewable energy projects.
While a Citibank spokesperson declined comment, queries emailed to spokespersons for Tata Power and Petronas on Sunday evening remained unanswered.
This potential deal comes in the backdrop of oil majors looking to diversify and invest in India’s emerging green economy as the conventional hydrocarbon space undergoes technological and pandemic related disruptions. Petronas had acquired Amplus Energy Solutions Pvt. Ltd, one of India’s largest rooftop solar power producers in April 2019, marking its foray into the global clean energy space.
“In addition to offering a 51% stake in its InvIT, Tata Power is also open to selling a minority stake in Tata Power Renewable Energy Ltd, that will provide access to development projects,” said a person cited above requesting anonymity.
The proposed minority stake sale in TPREL and the InvIT deal comes at a time when deal activity in the Indian green energy space continues unabated despite the coronavirus pandemic. In what may rank among the largest green energy deals in India, Acme Solar Holdings Ltd. is looking to sell 4.84 gigawatt (GW) of solar projects, Mint reported on Sunday. Also, Japan’s ORIX Corp. made the single-largest foreign clean energy investment announcement of $980 million in India for buying a 17% stake in Greenko Energy Holdings.
“We have very ambitious targets in renewables. For that, we require money and we are looking at bringing in strategic investors,” Praveer Sinha, managing director and CEO, Tata Power, had said in an earlier interview.
Mint reported on 10 lune about Dutch pension fund manager APG Asset Management NV, private equity firm Actis Llp, Ontario Municipal Employees’ Retirement System (OMERS), Canada Pension Plan investment Board (CPPIB), and Caisse de dépôt et placement du Québec (CDPQ) evincing interest in acquiring stake in Tata Power’ renewable energy InvIT.
“Tata Power has been in discussions for the InvIT with around half a dozen firms,” said a second person aware of the development cited above who didn’t want to be named.
The Economic Times newspaper on 5 June reported about Petronas eyeing stake in Tata Power’s InvIT.
“Apart from investing in the InvIT, Petronas is looking to acquire around 10% equity stake in Tata Power Renewable Energy Ltd,” said a third person cited above requesting anonymity.
This comes in the backdrop of India’s solar power tariffs hitting a record low of ₹2.36 per unit during a bid conducted by state-run Solar Energy Corporation of India Ltd (SECI). The foreign investors’ interest can be gauged by the fact that the lowest bid was placed by Spain’ Solarpack Corporaciуn Tecnolуgica, S.A., with Italy’s Enel Group’ Avikaran Surya India Private Ltd, Canadian firm’ AMP Solar Group’s India unit—AMP Energy Green Private Ltd, France’ EDEN Renewables and Ib Vogt Singapore Pte ltd placing the second lowest tariff bid of 2.37 per kilowatt-hour (kWh). UK’s CDC Group-backed Ayana Renewable Power and Goldman Sachs backed ReNew Power placed the third lowest bid of ₹2.37 per unit each.
“Consolidation in the industry is bound to happen. There are discussions which are happening with some investors regarding TPREL. Nothing has been finalised,” said a fourth person cited above requesting anonymity.