Tata Power And Petronas Call Off Investment Deal: Report

With the deal now closed, TPCL is now looking at raising an initial public offering (IPO) of its renewable business, assessing the demand for renewable energy companies rising in the investor market

Tata Power has ended talks with Malaysian oil and gas company Petroliam Nasional Berhad (Petronas) in connection with an investment deal of $2 billion for the proposed renewable energy infrastructure investment trust (InvIT) of Tata Power, announced a recent report. 

Both companies were at the final stages of negotiating a binding term sheet when the deal, which was at a final stage, was terminated, reported The Economic Times. 

Tata Power Renewable Energy Ltd (TPREL), which is a subsidiary of Tata Power Co Ltd (TPCL), had ideated last year to raise $500-750 million, which would also have helped the power major to bring down its net debt from Rs 36,363 crore to about Rs 25,000 crore. 

As per the publication, TPCL and Petronas engaged in lengthy negotiations in 2020, which culminated in hinting towards a multi-year, phased investment plan, with Petronas getting a near 30-35 per cent stake in the InvIT at a $2.5 billion enterprise value for an upfront investment of Rs 3500-Rs 3800 crores. Petronas also agreed to additionally invest $1.5 billion for a pipeline of projects over a specified timeline of 3-5 years. Several other institutional and financial investors were also to join the bandwagon of the InvIT, once the Petronas pact would have been sealed.

Call for IPO

With the deal now closed, TPCL is now looking at raising an initial public offering (IPO) of its renewable business, assessing the demand for renewable energy companies rising in the investor market. 

The power giant is also pensive about creating an umbrella entity that will house its operational and pipeline IPP projects along with its microgrid, rooftop solar panels and EV charging stations operations. The timeline for the listing of said entity is yet to be finalised, added the publication. 

Tata Power shares fall down

Industry watchers had been banking on this exciting deal between two power giants, following which shares of TPCL had earlier appreciated 285 per cent (almost 3x) in the last 1 year. Following Petronas exit, Tata Power shares shot down by 6 per cent.