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."