Tata Power mulls $450 million loan backed by offshore units

Tata Power Co. is in talks with banks to raise at least $450 million overseas for regular business operations, according to people familiar with the matter.

The company is seeking a five-year loan through the so-called external commercial borrowing route that would be backed by shares it holds in its subsidiaries in Indonesia and Singapore, the people said, asking not to be identified because the discussions are private. The talks are at an early stage, and key terms, including pricing, have yet to be finalised, the people said.

A spokesman for Tata Power declined to comment.

Tata Power is among the Indian infrastructure and energy companies increasingly tapping overseas loan markets as easing global funding costs and improving lender appetite revive external commercial borrowings. Adani Green Energy Ltd., backed by billionaire founder Gautam Adani, is seeking to raise up to $1 billion through an offshore loan over the next three months, Bloomberg reported last month.  

Tata Power is already among the top five large Indian borrowers tapping foreign-currency loans, according to data compiled by Bloomberg. 

External commercial borrowings allow eligible Indian companies to raise large funds from overseas lenders often at competitive borrowing costs and longer repayment terms, subject to Reserve Bank of India regulations.

Tata Power is likely to refinance its loan exposure as it has chunky repayment over next three years period given high capex plans, rating company CareEdge said in a note last month. 

The latest fundraising, if finalised, would provide additional liquidity as Tata Power accelerates investments across renewable energy, transmission and distribution while diversifying its sources beyond the domestic bond and bank markets.

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