Tata Power Eyes $450 Million External Commercial Borrowing To Fund Renewable Energy Push

Tata Power is in discussions with banks to secure at least $450 million through an overseas loan, with the fundraise expected to be structured as a five-year external commercial borrowing. The loan would be backed by shares the company holds in its subsidiaries in Indonesia and Singapore.

Talks are at an early stage and key terms including pricing have not yet been finalised, according to people familiar with the matter who asked not to be identified.

Why Tata Power Is Raising Funds Overseas

The move fits into a broader trend of Indian infrastructure and energy companies tapping overseas loan markets as global funding costs ease and lender appetite for Indian credit improves. External commercial borrowings allow eligible Indian companies to raise funds from overseas lenders at potentially competitive rates and with longer repayment periods, subject to RBI regulations.

Tata Power is already ranked among the top five largest Indian borrowers in the foreign-currency loan market. Adani Green Energy is separately seeking up to $1 billion through an offshore loan over the next three months, reflecting how active this segment has become.

What The Funds Are For

The proceeds are earmarked for general business operations, and the fundraise would provide additional liquidity as Tata Power steps up spending across renewable energy, transmission and distribution projects. The company has significant capital expenditure commitments over the coming years, and rating agency CareEdge noted last month that Tata Power is likely to refinance its loan exposure given substantial repayments falling due over the next three years alongside its high capex plans.

Raising funds through external commercial borrowings also allows Tata Power to diversify its funding sources beyond the domestic bond and bank markets, which have been its primary channels of financing to date.

Also Read - SBI Funds Management IPO: Who Is Eligible Under The Shareholder Quota?