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ICICI Venture and foreign investors who jointly own nearly three-fourths of Resurgent Power Ventures are planning to sell their stakes in the Tata Power-backed platform, two people aware of the development said. While Tata Power owns 26% of the Singapore-based company with assets worth $2.5 billion, the rest is owned by ICICI Venture, Kuwait Investment Authority, and Oman Investment Authority.
“The shareholders have met investment banks to arrange a sale," one of the two people said on the condition of anonymity, adding a formal mandate is awaiting approval from Tata Power parent Tata Sons. Resurgent Power focuses on acquiring and turning around conventional and hydroelectric projects as well as transmission assets that are operational, nearing operations, or in advanced stages of development. Established with an initial investment of $850 million in 2016, the company has acquired three projects via bankruptcy courts so far.
Tata Power, ICICI Venture, ICICI Bank, Oman Investment Authority and Kuwait Investment Authority did not respond to requests for comment sent on Monday. It is not clear if the mandate for sale will include a 74% stake sale or a full 100% stake sale. However, the second person cited above said Tata Power is not selling its stake currently.
According to this person, Tata Power’s acquisition of the rest of the stake cannot be ruled out. “One of the solutions is for Tata Power to increase its stake in the business," the person said on the condition of anonymity. Focus on transmission and green energy This is also because Tata Power has indicated in recent years that it is expanding its transmission business.
It also aims to grow its green power portfolio to over 15GW over the next five years. At an earnings call on 6 August 2024, Tata Power CEO Praveer Sinha had said is a great opportunity. Two of the three assets acquired by Resurgent Power are transmission companies.
“In the last two years, we took over two stressed assets, which are under implementation," Sinha had said, noting the two assets are already operational and earning revenue. He said Tata Power had recently won a competitive bid in Odisha to build a power project, which will be completed in over 24 months. Sinha noted that Tata Power would continue to place bids for transmission projects if there are no right of way (ROW) challenges.
With the US perceived to be moving away from green energy, there may be more interest in secondary deals in the conventional power space as well as revival of some stalled projects, as it becomes more acceptable to invest in conventional power again, said Deepto Roy, a partner at law firm Shardul Amarchand Mangaldas & Co. Roy noted that large transactions in the power sector are becoming fewer and farther in between. "While there continued to be notable secondary acquisitions in the renewable energy sector in FY25, there has been a notable reduction in the number of large platform acquisitions in the power sector," he said.
"The emphasis instead seems to be moving to more greenfield project development, including in hybrid, round-the-clock and battery storage projects, as well as consolidations within the existing groups. In my view that will be the dominant theme in the present year," said Roy, who specializes in infrastructure, energy, project finance and banking. Past acquisitions Resurgent Power completed the acquisition of 75% stake in Prayagraj Power Generation Co.
Ltd (PPGCL) in 2019, which it has turned around since then. In 2021, it acquired 100%stake in NRSS XXXVI Transmission Ltd after lender PTC India Financial Services initiated a sale of NRSS through the bankruptcy courts. In 2022, the South East UP Power Transmission Co.
Ltd was also acquired by Resurgent, again through the bankruptcy process. “PPGCL has a 25-year power purchase agreement with each of the five distribution utilities of Uttar Pradesh for the sale of 90% of power generated since its commissioning in May 2017," said an India Ratings credit report on Prayagraj Power. “PPGCL is one of the largest power plants in the country.
This, along with reliable supply, has helped the plant’s PLF (plant load factor) to be healthy even with the relatively high variable cost," the 10 June 2024 report added. In its FY24 annual report, Tata Power said that while it was expanding its clean energy portfolio to reach 15 GW by 2029, it is also expanding its transmission portfolio through successful tariff-based competitive bids. “Our transmission portfolio now stands at 6277 CKm (circuit km) with recent wins including Jalpura Khurja Power Transmission Ltd, and Bikaner III Neemrana II Transmission Ltd valued at 2300 crore," the annual report said.
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