Indian Tata Power spinning off clean energy business
installations of Tata Power Solar (source: Tata Power)
Alexander Richter
9 Nov 2015
In order to strengthen its position and to finance renewable energy development activities, Tata Power is planning a spin-off of its clean energy business. It is though unclear if this includes the geothermal business of Tata in Australia and Indonesia.
News from India report that the utility arm of India’s largest business group, has announced plans to spin off its clean energy business into an independent unit with a separate strategic focus. The company will bring its 500MW of renewable energy assets including wind and solar under a new subsidiary called Tata Power Renewable Energy.
The restructuring, subject to regulatory and shareholder approval, will pave the way for investments from private equity players in Tata Power Renewable Energy as the parent seeks funds to ramp up capacity of the clean energy arm through greenfield projects and also through acquisitions.
India’s clean-energy is the new Gold Rush for marquee private equity funds that are putting millions of dollars in the sector since Prime Minister Narendra Modi set a target to have 60GW of wind energy and 100GW of solar power by 2022, up from current levels of 25GW and 4GW, respectively. To boost the sector, the government has permitted 100% foreign investment and is offering tax-breaks.
Tata Power will look at a share-sale to private equity investors in the clean-energy unit once the business reaches a reasonable size as it will aid in deriving attractive valuations. Post the restructuring, the total capacity of Tata Power Renewable Energy will be 750MW after the addition of a 250MW under-construction facility. The fund-raising will help in financing the unit’s growth plans as the Anil Sardana-led Tata Power intends to have a quarter of its total generation capacity come from renewables.
It is though so far unclear wether international renewable energy assets, such as the participation in geothermal assets, such as Australia (Geodynamics) and Indonesia (OTP-Geothermal)
Source: The Times of India
