Tata Power Cancels renewable power deal with Malaysia's Petronas

Last week's decision conveyed after year-long negotiations, Tata Power has terminated their near $2- billion investment deal with Malaysian state-owned oil and gas company Petroliam Nasional Bhd (Petronas) in Tata Power proposed renewable energy infrastructure investment trust, said multiple people aware of the development.

April 14, 2021. By News Bureau

Tata Power Co Ltd has terminated its discussions with Malaysian oil and gas company Petroliam Nasional Berhad (Petronas) to raise capital for its renewable energy business through a proposed infrastructure investment trust.
 
Tata Power's subsidiary, Tata Power Renewable Energy Ltd (TPREL), had last year initiated talks to raise $500-$750 million for its renewable energy platform. The move was expected to reduce Tata Power's net debt to Rs 25,000 crore from over Rs 36,000 crore.
 
The talks had led to an understanding, with Petronas agreeing to invest Rs 3,500-Rs 3,800 crore for about 30-35 per cent stake in the InvIT at an enterprise value of $2.5 billion. Besides Petronas, other institutional and financial investors were also to come on board in the future to invest in the InvIT.
 
However, Tata Group decided to terminate the deal last week when both sides were in final stages of discussions for negotiating a binding term sheet, The Economic Times reported citing multiple sources.
 
Tata Power is now looking for initial public offering (IPO) of its renewable energy business. The company plans to create a separate entity that will hold the renewable projects along with roof top solar projects and electric charging stations.
 
"Both sides were focussed on finalising the binding agreement. It was at that point it was relayed that the board was hesitant to proceed any further since it felt better valuations can be achieved through an IPO. The surge in the Adani Green stock, ReNew Power SPAC listing has really made everyone excited to tap the capital markets," the publication cited a source as saying.
 
Tata Power's subsidiary, Tata Power Renewable Energy Ltd (TPREL), had last year initiated talks to raise $500-$750 million for its renewable energy platform. The move was expected to reduce Tata Power's net debt to Rs 25,000 crore from over Rs 36,000 crore.
 
The talks had led to an understanding, with Petronas agreeing to invest Rs 3,500-Rs 3,800 crore for about 30-35 per cent stake in the InvIT at an enterprise value of $2.5 billion. Besides Petronas, other institutional and financial investors were also to come on board in the future to invest in the InvIT.
 
However, Tata Group decided to terminate the deal last week when both sides were in final stages of discussions for negotiating a binding term sheet, The Economic Times reported citing multiple sources.
 
Tata Power is now looking for initial public offering (IPO) of its renewable energy business. The company plans to create a separate entity that will hold the renewable projects along with roof top solar projects and electric charging stations.
 
"Both sides were focussed on finalising the binding agreement. It was at that point it was relayed that the board was hesitant to proceed any further since it felt better valuations can be achieved through an IPO. The surge in the Adani Green stock, ReNew Power SPAC listing has really made everyone excited to tap the capital markets," the publication cited a source as saying.
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