Tata Power Plans to Create RE InVIT worth Rs.16 Crores to Reduce Debt

Tata Power has announced that it plans to create an infrastructure investment trust (InViT) for its renewable energy portfolio, approximately 3 GW in assets, to ease its debt on its balance sheets by nearly a fourth and then raise growth equity from potential investors.

InViTs are implements which work like mutual funds and enable direct investment of money from individual and institutional investors in infrastructure projects to gross a small portion of the income as a return.

The firm which has assets passing up to 2549 MW in 14 states across the country and another 400-500 MW of renewable projects in the pipeline. A majority of the company’s assets are solar, largely due to the $1.4 billion acquisition of Welspun Energy’s assets aggregating to nearly 1.1 GW in June of 2016.

At the company’s 100th annual general meeting held in Mumbai, Tata Sons Chairman, N Chandrsekaran alluded to the debt reduction strategy and said, “On the debt level side, we did close a couple of transactions to sell some of the cross holdings that Tata Power had in some of the Tata Group companies. We continue to find ways in which we can bring debt level further down primarily by selling non-core assets.”

According to sources close to the developments, the plan is to hive off the operating assets in the InVIT along with with Rs 10,000 crore of debt. The company is seeking to raise Rs 6,000-7,000 crore ($750 million-1 billion) of equity from infrastructure-focussed investors.

If the planned idea is executed the firm will join Sterlite, Piramal Enterprises, Larsen and Toubro and Reliance Industries in forming an investment trust for operational infrastructure assets.