BlackRock looks to power Tata Power’s green business

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BlackRock chairman and CEO Larry Fink is coming to India, in form of his company BlackRock, Inc to invest in one of India’s prime conglomerates, Tata.

This Wall Street investment giant, seeking to be a leader in ESG, and being the largest sustainable investor will invest close to ₹3,750-5,625 crore ($500-700 million) in Tata Power Renewable Energy Ltd (TPREL).

Because of this investment by the world’s largest asset manager, this Tata subsidiary’s value will be listed at almost ₹35,000 crores ($5billion).

This is after the investment bank Moelis mandated Tata power to restart capital raising after they pulled out of an investment deal worth $2billion with Petronas, the Malaysian state-owned energy giant.

Another potential investor in Tata’s renewable project was Canada’s CPPIB. But BlackRock’s amount buoyed by TPG Rise’s $1billion investment in Tata Motors EV business made it the fittest in this survivalist game.

Tata has already screened the potential investor and has begun due diligence. They are looking forward to closing the deal by December-end, and will also look for smaller co-investors to raise to $1 billion, that too only based on investor appetite.

BlackRock has an impressive resume when it comes to renewable energy. It has dedicated pools for green energy and cleantech investment. Their third fundraiser for the global renewable power fund, raised $4.8 billion, almost double their initial target.

This was used to invest in renewable assets all over the world, with money drawn from over 100 institutes.

Previously they attempted to create an infrastructural investment trust to generate green assets. Now they are raising it for an entity that groups the entire renewable portfolio.

This will include IPP assets, micro-grids, rooftop solar, EPC, etc. For example, Tata Power Solar is a subsidiary of TPREL, and it is fully owned by the latter. Experts see this as a value unlocking, valuation benchmarking exercise before listing.

Tata Power has a power capacity of 13 GW of energy and renewable energy comprises almost a third of it. They are trying to phase out the remaining coal-based capacity and expand green energy by 80% by the financial year of 2030.

Being the nation’s largest integrated power company, this could be a game-changer in the national energy field, in turn improving its ESG ratings to attract foreign investors.

They are looking for a holistic strategy across the renewable energy spectrum, from solar panel construction to EV charging points. In this way, they are focusing on less capital intensive but attractive sections such as solar EPC, etc.

They are moving into the B2C value chain in fields like EV charging stations, etc. and have a strong presence in the solar value chain. They are also trying their hand in battery storage technology.

Nationally they are frontrunners when it comes to being an eco-friendly industry. This will receive a boost under the government’s net-zero policy.

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