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The world’s biggest asset manager, BlackRock, and UAE sovereign wealth fund Mubadala Investment Co. are in talks to invest around $500 million and $200 million, respectively, in a proposed new energy entity being floated by Tata Power Co. Ltd, two people aware of the development said. The new vehicle will house all the renewable energy assets of Tata Power, including hydropower, as well as its transmission and distribution business.

The business, tentatively called “consumer renewables", is expected to be valued at around $5 billion and will house all Tata Power assets except coal-fuelled power projects and carbon projects, the people cited above said on condition of anonymity.

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This follows an earlier attempt by Tata Power to dilute its stake in Tata Power Renewable Energy Ltd (TPREL), its wholly owned subsidiary and primary investment vehicle in clean energy, where BlackRock had reportedly evinced interest. Tata Power had also hired Citibank to find an investor for its renewable energy InvIT, which was to house 3 gigawatts (GW) of renewable energy projects.

“The talks are no longer confined to TPREL. The play is more than green energy now, given the global context of investing as well. The stakes that BlackRock and Mubadala may acquire will depend upon the valuation," one of the two people cited above said.

The growing interest in India’s green energy space comes amid investors’ focus on environmental, social and governance (ESG) goals. With a total capacity of 13.061GW, Tata Power is among India’s largest integrated power companies operating in renewable and conventional energy, electricity transmission and distribution, coal and freight, logistics and trading. It also supplies electricity to 12 million consumers through its distribution companies in North Delhi and Odisha. Its growth areas include distributed generation through rooftop solar and microgrids, storage solutions, electric vehicle charging infrastructure, Energy Service Company (ESCO), home automation and smart meters.

Mubadala is no stranger to India’s growing green economy. It owns Masdar, also known as the Abu Dhabi Future Energy Co., which acquired around 20% of Hero Future Energies Pvt. Ltd in November 2019 for $150 million. Also, sovereign wealth funds, including Mubadala, Singapore’s GIC Holdings Pte Ltd, and Abu Dhabi Investment Authority (ADIA), have been exploring investments in Reliance Industries Ltd’s clean energy unit, as reported by Mint earlier.

“Thank you for reaching out, but I’m afraid we do not comment on market speculations," a BlackRock spokesperson said in an emailed response. A Tata Power spokesperson, in a text response, said, “We would not like to comment on market speculations."

Queries emailed to the spokespersons of Mubadala and Masdar on Sunday night remained unanswered till press time.

Earlier, Malaysia’s state-run oil and gas company Petroliam Nasional Bhd, or Petronas, was looking to acquire around a 10% stake in TPREL, in addition to investing in Tata Power’s green energy InvIT; however, the deal didn’t fructify. Also, Dutch pension fund manager APG Asset Management NV, private equity firm Actis Llp, Ontario Municipal Employees Retirement System (OMERS), Canada Pension Plan Investment Board (CPPIB), and CDPQ had evinced interest in the InvIT, as reported by Mint on 10 June 2020.

ABOUT THE AUTHOR

Utpal Bhaskar

"Utpal Bhaskar leads Mint's policy and economy coverage. He is part of Mint’s launch team, which he joined as a staff writer in 2006. Widely cited by authors and think-tanks, he has reported extensively on the intersection of India’s policy, polity and corporate space.
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