NTPC plans to sell a stake in its green arm and raise Rs5,000 crore

11 Jul 2022 , 10:03 AM

According to news reports, NTPC intends to raise Rs5,000 crore by selling a stake in a recently established green energy division. According to reports, the state-owned power generation behemoth has hired SBI Capital Markets to provide advice on the sale process, which could formally begin in October. The Kuwaiti and Abu Dhabi sovereign wealth funds, as well as the Canadian pension funds, are situated in the Middle East.

After the infusion of capital, NTPC wants to keep the majority ownership of the arm.

Given that the company has government backing, the stake sale is anticipated to generate considerable interest.

Additionally, it can give investors peace of mind by guaranteeing that their projects would be supported by safe, long-term power selling agreements. Inquiries for feedback sent through email to NTPC received no response.

The business disclosed to the stock exchange on Saturday that it would separate 15 of its renewable energy projects into a new company called NTPC Green Energy Ltd. Book value for the assets under separation is Rs10,000 crore. Additionally, NTPC Green Energy, which will now serve as the primary vehicle for its green energy objectives, is receiving its entire interest in NTPC Renewable Energy Ltd.

Due to the fact that a number of the transferred assets are ongoing solar or wind projects that have not yet been put into service, their fair value may be greater than their book value. Around 2.5 GW of potential energy-producing capacity is in the transferred assets.

In April, Tata Power sold BlackRock and Mubadala nearly 10% of its subsidiary Tata Power Renewables for Rs4,000 crore. Tata Power’s renewable energy division was valued at Rs35,000 crore at the time of the equity sale.

Under the National Monetization Pipeline (NMP) of the Indian government, various ministries have been given goals for raising money by selling the assets of PSUs that fall under their purview.

NTPC, which generates one-fourth of all the electricity in India, aims to quickly transition away from coal-based power and toward renewable sources.

Its management stated at an investor conference call in January that 40—45% of its capital investment will go toward establishing renewable energy projects for the generation of power. In the current fiscal year, the corporation anticipates capital expenditures of more than Rs20,000 crore. NTPC anticipates generating 45% of its electricity from renewable sources over the next ten years.