Tata Power Provides Update on InvIT for its Renewables Business

Tata Power in its latest regulatory filing has provided an update on the process of creation of an InvIT for its renewables business

Tata Power, in its latest regulatory filing, has stated that as a part of its growth strategy, the Company has taken several steps to deleverage the balance sheet and improve the capital structure including the creation of an InvIT for its renewables business as laid out in the firms’ previous press release which was issued on July 2, 2020.

As an update on this process, the Company has issued that it has

• Already made an application to SEBI for in-principle approval for creation of the InvIT,
• Anchor investor(s) in the InvIT have started their due diligence of the assets proposed to be transferred to InvIT,
• And the firm expects to sign the binding documents in the next few months.

The firm has clarified that the necessary board and shareholder approvals will be sought on finalisation of the binding agreements.

“Creation of the InvIT will provide a suitable structure for the Company to expand its renewable business as laid out in its FY 25 strategy. The Company is progressing on setting up of the InvIT as per the initially laid timelines and is confident of completing this transaction in this financial year,” the firm stated.

In July, the firm had stated that it is working on a strategic turnaround plan to strengthen the fundamentals of the Company through a mix of divestment and business restructuring that will deleverage the balance sheet and improve the capital structure of the Company.

And the creation of the InvIT was a part of the firms’ long-term strategic plan which involves reducing debt thereby strengthening the balance sheet and improving overall return metrics through:

a) Divestment of non-core and certain overseas investments;

b) Restructuring of some of its businesses to unlock value and simplify the structure of the Company and its subsidiaries. Consequent to this, the Company had decided to pursue setting up of InvIT for its renewables business; and

c) Raising of equity to reduce unsustainable debt in Tata Power and/or its subsidiaries.

Praveer Sinha, CEO & MD, Tata Power had said at the time, “the Board’s in-principle approval for setting up of an InvIT is another important step towards restructuring the renewables business and unlocking value. This along with the divestment of various non-core and overseas assets will help in deleveraging in preparation for an ambitious growth plan over the next decade.”