Tata Power to acquire Welspun's renewable energy arm for Rs9,249 cr

Tata Power on Monday said it will buy Welspun Energy's subsidiary, Welspun Renewable Energy Pvt Ltd (WREPL), at an enterprise value of Rs9,249 crore, to boost its portfolio in renewable space.

Tata Power's subsidiary Tata Power Renewable Energy (TPREL) has agreed to acquire WREPL through a share purchase agreement (SPA) at an enterprise value of Rs9,249 crore, subject to closing adjustments.

WREPL has one of the largest operating solar portfolios in India spread across ten states. It has about 1,140 MW of renewable power projects comprising about 990 MW solar power projects and about 150 MW of wind power projects. Out of 1,140 MW renewable portfolio, nearly 1,000 MW of capacity is operational and balance capacity is under advanced stages of implementation.

TPREL currently operates 294 MW of renewable power capacity and 500 MW of renewable assets are being carved out of Tata Power into TPREL through a court process. In addition, almost 400 MW of solar and Wind power projects are under implementation. Thus, TPREL with all these assets, would have renewable assets portfolio of about 2,300 MW making it the largest renewable power company in India, Tata power stated in a release.

Post acquisition, the company will be able to maintain its current debt-equity level of 2.8, even in this fiscal, Tata Power CEO and managing director Anil Sardana said.

"This was a strategic decision taken by the company as we intent to increase our renewable energy portfolio to 20,000 MW by 2025. We will be making the payment in two tier using our own leverage at Tata Power and then later will explore all options. The aim is to fund it through competitive ways like low-cost debt," Sardana told reporters.

He said the extra land available at the project site and declining prices of silicon has made the acquisition attractive, Sardana said.

"Almost all projects have extra land which in times to come could be exploited depending on the availability of substation and transmission capacity there. If they are implemented we will able to add panels and achieve extra generation without going through the full capital cost of setting up the infrastructure and acquiring land," he said.

Sardana said since the projects are spread across 10 states, it will be a de-risk portfolio from the company's perspective. Also, most of them are revenue generating and operating assets.

"In solar, our investment was limited. We were hopeful prices of silicon will drop and we did not want to sit on pile of assets," he added.

With the acquisition of all these assets, TPREL would have renewable assets portfolio of about 2,300 MW, making it the largest renewable power company in India.

JM Financial Institutional Securities Limited acted as exclusive Transaction Advisor to TPREL in relation to this transaction. KPMG India Private Limited was the Accounting & Tax Advisor. AZB & Partners acted as the Legal Advisor for this transaction.