Tata Power launches Rs 1,500-crore debenture issue

MUMBAI: Tata Power Co Ltd has launched an issue of perpetual debentures to raise Rs 1,500 crore, India’s largest private sector power generator informed bourses Wednesday.

The bonds will have a coupon of 11.4% per annum, with a step up provision if the bonds are not called after 10 years, the company said in a statement.

Perpetual capital instruments are a form of debt with equity-like features and help the issuer raise funds without diluting share capital. The unique features of Tata Power’s debentures are that they are perpetual in nature with no maturity or redemption and are callable only at the option of the company.

“As Tata Power continues to develop and execute its significant growth plans, this innovative long term funding with equity features but without the associated economic dilution helps to diversify our financing options,” Executive Director S. Ramakrishnan was quoted as saying in the statement.

The instrument will have 50% equity credit by the company’s credit rating agencies, CRISIL and ICRA.

This would be the second fund raising exercise by Tata Power in the recent past through an innovative debt instrument. It raised $450 million through a hybrid capital offering in April.

At 01:57 PM IST, shares of Tata Power were trading at Rs 1,239.50 rupees on the Bombay Stock Exchange, up 0.6% from Tuesday. Benchmark index Sensex was up 0.3% at 18,558.