Indian renewable energy company ReNew Power Private Limited is now a step closer to getting listed on the NASDAQ in the US after it executed a definitive agreement to merge with a blank check company called RMG Acquisition Corporation II (RMG II), listed on the NASDAQ as RMGB.
A blank check company is formed solely to execute a merger, share exchange, reorganization or asset acquisition, among other purposes. RMG II said it raised $345 million through an initial public offering (IPO) in December 2020.
Details of the transaction
This transaction tags the proposed new company at around $8 billion enterprise value. Both the companies in a joint statement said anticipated net proceeds of close to $610 million will fund the company's accelerated growth strategy and pay down debt. Equity investment of $1.2 billion comprises $855 million of private investment in public equity (PIPE), and $345 million of gross cash held in trust by RMG II.
On closing of the merger, expected in Q2/2021, the combined entity will be called ReNew Energy Global PLC and listed on the NASDAQ under the ticker RNW.
ReNew Power's existing shareholders including Goldman Sachs, the Canada Pension Plan Investment Board (CPP Investments), Abu Dhabi Investment Authority (ADIA), and JERA Co., Inc. (JERA), will roll a majority of their equity into the new company to collectively represent close to 70% of the ownership on transaction close.
PIPE investors include funds and accounts managed by BlackRock, BNP Paribas Energy Transition Fund, Chamath Palihapitiya, Sylebra Capital, TT International Asset Management Ltd, TT Environmental Solutions Fund and Zimmer Partners.
Objective
ReNew Power believes this transaction would boost its position in the Indian solar and wind market by funding medium-term growth opportunities, buildout of its contracted, utility scale renewable power generation capacity, and enable it to pay debt.
The investors see a huge market potential for renewable energy in India that chases 450 GW of installed renewable energy capacity by 2030 to meet its global climate commitments, and pushed by technological advances and 'well-contested auctions' their adoption is to accelerate.
"Over the next decade, ReNew plans to maintain its track record of market share growth, and contribution to the greening of the Indian power sector, and to help meet the Indian government's ambitious renewable energy targets," said current Chairman and CEO Sumant Sinha who will continue to lead the new entity post merger. "Over time, we will expand our capabilities even further, with utility-scale battery storage, and customer focused intelligent energy solutions."
Manufacturing plans – from solar cells to batteries
Currently, ReNew Power holds over 5 GW of operational renewable energy capacity, and including the committed capacity of 4.5 GW, its aggregate capacity stands at 9.863 GW, the highest among its competitors in India, according to statistics shared by RMB II. All of the company's total utility scale committed capacity is contracted under power purchase agreements with an average duration of over 24 years, with a bulk of these with central government agencies.
In July 2020, ReNew Power said it will enter the solar cell manufacturing domain eyeing an initial 2 GW capacity, to be further scaled up (see ReNew Power To Enter Cell Manufacturing).
Recently, the State Government of Gujarat approved 5 big investment proposals including one by ReNew Power subsidiary ReNew Saksham Urja Private Limited to invest more than INR 40 billion ($552 million) to set up a 2 GW to 4 GW solar module, cell manufacturing and lithium-ion battery production plant at Dholera Special Investment Region (DSIR). According to a news report by The Times of India (TOI), the state government has approved 100-acre land to be allocated to ReNew Power for this project. DSIR is where the government is planning to locate 5 GW Dholera Solar Park.
The National Thermal Power Corporation (NTPC) is also planning another 5 GW ultra mega solar park in Kutch, Gujarat (see NTPC Planning 5 GW Ultra Mega Solar Park In Gujarat).
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