BackTata Sons to infuse ₹2,600 crore into Tata Power
The issue price for the equity shares has been fixed at ₹ 53 apiece, 15% premium to the Wednesday’s closing priceTata Sons’ shareholding in its subsidiary will increase to 45.21% from 35.27% on allotment of equity shares pursuant to the preferential issue
PremiumMUMBAI : The board of directors of Tata Power Ltd on Thursday approved issuance of 49.05 crore equity shares to its parent company Tata Sons Pvt Ltd via preferential allotment for an aggregate sum of ₹ 2,600 crore. The issue price for the equity shares has been fixed at ₹ 53 apiece, 15% premium to the Wednesday’s closing price.
"Tata Sons’ shareholding in its subsidiary will increase to 45.21% from 35.27% on allotment of equity shares pursuant to the preferential issue. Consequently, Tata group’s shareholding will increase from 37.22% to 46.86%," Tata Power said in a regulatory filing. The company will seek shareholders’ nod for the preferential issue at its annual general meeting on 30 July.
Shares of Tata Power Ltd closed nearly 8% high at ₹49.65 apiece on the BSE in Thursday’s session following the announcement.
“Tata Power 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," the company said, adding that “These actions are expected to improve the fundamentals and lead to improvement in long term shareholder value."
The long-term strategic plan involves reducing debt thereby strengthening the balance sheet and improving overall return metrics through divestment of non-core assets and certain overseas investments, restructuring of some of its businesses to unlock value and simplify the structure of the company and its subsidiaries and setting up the InvIT for its renewables business, and raising equity to reduce unsustainable debt in Tata Power and/or its subsidiaries.
Praveer Sinha, CEO & MD, Tata Power said, “This equity raise demonstrates the confidence reposed by the Tata Group in the company’s capabilities and further strengthens the effort to reduce debt & capitalize the company to invest in future growth. Similarly, 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."
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