NEW DELHI, Dec 14 (Reuters) – India’s largest power producer NTPC Ltd (NTPC.NS) plans to sell a 20 percent stake in its green energy business this fiscal, expected to raise as much as 30 billion Indian rupees (363.97 million). U.S. dollars), three government sources said.
The deal marks the first green deal for an Indian state-owned company and has attracted interest from investors including the Canada Pension Plan Investment Board (CPPIB), Petronas and Brookfield.
Two sources with direct knowledge of the matter said NTPC Green Energy Ltd (NGEL) will conduct an initial public offering next financial year before deciding to sell a 20 percent stake to a strategic investor.
India’s renewable energy sector is among the five sectors that have attracted the most foreign investment in the country this year. Its percentage of total FDI inflows has risen to 5% in April-September 2022 from 3.3% in the same period last year, data from India’s Commerce Ministry showed.
NTPC originally planned to raise funds through a public share sale. The company is now considering selling a 20 percent stake first through a private placement because that would provide a valuation for the IPO, a third source said. The size of the stake sale and the transaction value have not been previously reported.
NTPC did not respond to a request for comment.
NTPC plans to invest over Rs 2.5 trillion over the next 10 years to increase the non-fossil energy share of its portfolio to 45% from the current 9.41%. Its remaining capacity is coal-fired.
It is willing to sell a total of 49 percent of its green energy unit in tranches, the sources said.
“The proposal has been tabled by the power ministry for consideration by the federal cabinet. The stake sale is targeted for this financial year,” one of the sources said.
India’s fiscal year starts on April 1 and runs until March.
To test investor interest in the share placement, NTPC in September filed a letter of intent to sell a minority stake in NGEL. It received 13 bids from investors, which also included ArcelorMittal, India’s NIIF and Abu Dhabi-listed TAQA.
NTPC Green Energy will be the driving force behind the parent company’s non-fossil business. The company has pledged to add 60 GW of renewable energy by 2032 to the group’s total capacity of 130 GW.
On Tuesday, the company said it had surpassed 1 gigawatt of annual production capacity in its renewable energy sector.
NTPC has said it will not build new coal-based projects, but is considering some expansion projects at its existing pithead power plants. NTPC has a total capacity of 70.7 GW.
India has set a target of net zero emissions by 2070 and has committed to sourcing 50% of its cumulative installed electricity capacity from non-fossil fuel sources by 2030.
The country aims to generate 500 gigawatts of electricity from renewable sources by 2030. Renewable energy, including wind, hydro and biomass, accounts for 30% of the country’s current installed capacity of 409 GW.
($1 = 82.4250 Indian Rupees)
Sarita Chaganti Singh reports.Edited by Jane Merriman
Our Standards: The Thomson Reuters Trust Principles.