NTPC plans to raise ₹5,000 crore by selling a stake in a newly created green energy arm, according to people aware of the matter. The state-owned power generation giant has engaged SBI Capital Markets to advise on the sale process, which could be formally launched in October, these sources said. Feelers have been sent to Middle East-based sovereign wealth funds of Abu Dhabi and Kuwait, as well as pension funds of Canada.
NTPC is keen to retain a majority stake in the arm after the infusion of funds.
The stake sale is expected to attract strong interest as the company has sovereign backing.
It can also offer certainty to investors on the assurance that its projects will be backed by secured, long-term power sale agreements. NTPC did not respond to emailed queries seeking comment.
According to a stock exchange disclosure by the company on Saturday, NTPC will hive off 15 of its renewable energy projects into NTPC Green Energy Ltd, a newly formed entity. The assets being separated have a book value of ₹10,000 crore. Additionally, its 100% stake in NTPC Renewable Energy Ltd is also being transferred to NTPC Green Energy, which will now be the main vehicle for its green energy ambitions.
The fair value of assets being transferred could be a multiple of the book value because several of them are work-in-progress solar or wind projects that are yet to be commissioned. The potential energy generation capacity of the assets being transferred is around 2.5 GW.
In April, Tata Power sold close to 10% in its arm Tata Power Renewables to BlackRock and Mubadala for ₹4,000 crore. The stake sale valued Tata Power’s renewable energy business at ₹35,000 crore.
Tata Power has operational renewable energy generation capacity of around 4 GW. The deal with BlackRock and Mubadala also combines other facets of Tata Power’s renewable energy expansion plans, such as those for battery storage, solar manufacturing and electric vehicle charging. Other groups such as Reliance and Adani have also created specialised entities for their green energy plans.
NMP at Work
Under the government of India’s National Monetisation Pipeline (NMP), various ministries have been assigned targets to raise funds through monetisation of assets of public sector undertakings that come under their fold.
NTPC’s plans — to first carve out its renewable energy assets into a special purpose vehicle and, subsequently, sell a stake to raise funds — are to meet those targets.
NTPC, which accounts for one-fourth of India’s electricity generation capacity, wants to move swiftly to renewable sources, from its current mainstay of coal-based power.
During an investor conference call in January, its management said 40-45% of its capital expenditure will go towards setting up renewable energy projects for electricity generation. The company plans in excess of Rs 20,000 crore capital expenditure in the current fiscal year. In the next 10 years, NTPC expects that 45% of energy generated by it will be through renewable sources.
