A consortium led by BlackRock Real Assets, which includes Abu Dhabi’s Mubadala Investment Company, will invest 40 billion Indian rupees ($525 million) in a subsidiary of India’s Tata Power to create the country’s “most comprehensible” renewable energy platform.
The consortium will receive a 10.53 per cent stake in Tata Power Renewables, translating to a base equity valuation of $4.46bn, Mubadala said on Thursday.
The final shareholding will range from 9.76 per cent to 11.43 per cent, based on final conversion, it said.
Tata Power Renewables has a “broad and deep” portfolio of next-generation renewables businesses "well placed to scale up rapidly based on its strong and consistent performance over the years", said Praveer Sinha, chief executive and managing director of Tata Power.
“The collaboration will support us to pursue exciting opportunities that lie ahead."
Tata Power Renewables is one of the largest renewable energy companies in India.
Its vertically integrated operations have about 4.9 gigawatts of renewable energy assets. The proposed investment is expected to fund aggressive growth plans.
Over the next five years, the company aims to achieve a portfolio of more than 20GW of renewables assets and a market-leading position in the rooftop and electric vehicle charging space across India, the world’s second most populous country.
India is one of the world’s largest renewable energy markets and has recorded the fastest-growing supply with more than 60 per cent new capacity added over the past four years, official data shows.
Its installed renewables capacity is expected to grow to 500GW by 2030 from 150GW, to satisfy India’s local energy demand and contribute to the government’s decarbonisation ambition.
“Tata Power is one of India’s largest integrated power companies and is well positioned to support the country’s energy independence and transition,” said Khaled Al Qubaisi, chief executive of real estate and infrastructure investments at Mubadala.
“We are proud to show our ongoing commitment to India with this investment and look forward to working with Tata Power to capitalise on the growth opportunities ahead."
The first round of the investment is expected to be completed by June and the balance will be provided by the end of this year.
The deal is subject to regulatory approvals, Tata Power said.
India's green energy sector is set to receive a boost from the country's target of achieving carbon neutrality by 2070.
Indian Prime Minister Narendra Modi unveiled India's net-zero plans at Cop26 in Glasgow last year, with some critics saying the 2070 target fell short of expectations.
The US, Europe and the UK have pledged to be carbon neutral by 2050 and China has pledged to achieve the same by 2060.
The International Energy Agency estimates India's energy demands to grow more than any other country over the next 20 years.
By 2030, it is expected to overtake the EU as the world's third-biggest energy consumer.
“With one of the largest portfolios of solar and wind assets in the country … Tata Power Renewables is at the forefront of India’s ambition to secure greater energy stability for its citizens while positioning its economy for a low-carbon future,” said Anne Andrews, BlackRock’s global head of real assets.
“India’s success in transitioning its energy economy will be crucial to the world’s ability to meet its climate goals."
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UAE currency: the story behind the money in your pockets
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The specs: Volvo XC40
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- undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
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UAE currency: the story behind the money in your pockets
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
