Tata Power plans to raise funds by offloading a minority stake in core investments as well as the sale of non-core investments, among other measures, to finance its future projects.
The leading power utility would also look at various other avenues, including the overseas bond market, external commercial borrowings (ECB) and the rupee loan/bond market to raise funds.
Listing out various options to raise funds, Tata Power in a recent presentation to analysts said the strategy is to raise low cost funds “while maintaining leverage ratios at target levels“.
The power generator said the source of equity for funding future projects could include the sale of non-core investments, a minority stake sale in core investments and equity infusion at the parent level.
At present, Tata Power has an operational capacity of 3,701 MW. This includes 2,974 MW (thermal), 447 MW (hydro) and 277 MW (wind). About 4,826 MW capacity is under execution.
Tata Power is into the transmission, distribution and trading of power, among other activities.
Noting that all projects under execution are fully funded, Tata Power in the presentation said, “Multiple avenues to raise equity and a strong brand name in the debt market ensure funds at very competitive rates.”
The company said that fund-raising for projects in the pipeline would be done at the time of investment approval.
“Tata Power raises equity in advance of requirement, taking advantage of opportune market conditions. Debt is raised in accordance with the project requirement at competitive rates,” it noted.
According to the company, high GDP growth, power shortages, rising per capita consumption and projected capacity addition provide large growth potential in the power sector.
