Canada's Ontario Teachers' Pension Plan Board has announced a strategic investment to acquire a 30% equity stake in Indian renewable energy company Mahindra Susten Private Limited for INR 23.7 billion ($300 million) to 'capitalize' on the growing renewables opportunity in India.
Binding agreements signed to this effect will also entail setting up of an Infrastructure Investment Trust (InvIT) compliant with the Securities and Exchange Board of India (SEBI). It will initially comprise renewable power assets seeded by Mahindra with an operational capacity of around 1.54 GW DC.
Mahindra Group's shareholder loans of around INR 5.75 billion ($73 million) that it advanced to Mahindra Susten will be repaid. Additionally, Mahindra Group will receive approximately INR 13.0 billion ($163 million) under the transaction.
Both Mahindra Group and Ontario Teachers' plan to raise additional funds by selling 9.99% stake in Mahindra Susten by May 31, 2023. This along with an incremental up to INR 17.5 billion ($220 million) will be invested by the group into the business and InvIT for the next 7 years. To this, Ontario Teachers' will also deploy an additional of around INR 35.5 billion ($446 million).
The acquisition is subject to regulatory approvals expected to be completed over the next few months while the InvIT is likely to be formed during FY 2024.
For Mahindra Susten this investment from the Canadian pension fund means a strong financial partner to support building a strong renewable energy business focused on solar energy, hybrid energy, integrated energy storage and round-the-clock (RTC) green energy plants.
Welcoming the 'continued inflow of patient, long-term capital' into the business as a result of this deal, Member of Group Executive Board and EVP, Partnerships & Alliances at the Mahindra Group, Puneet Renjhen said, "The partnership with Ontario Teachers' will enable the Mahindra Group to unlock value in the renewable energy sector with continued joint investments towards accelerated growth."
"As part of our climate change strategy, we have committed to continue growing our portfolio of green assets around the globe with investments like Mahindra Susten," Senior Managing Director, Asia Pacific, Infrastructure & Natural Resources at Ontario Teachers' Bruce Crane. In December 2021, Ontario Teachers' acquired 50% stake in a subsidiary of US based NextEra Energy Resources subsidiary (see North American PV News Snippets).
In August 2022, Mahindra Susten announced Deepak Thakur as its new MD and CEO who will also be responsible for other renewable segments of Mahindra Group including Mahindra Solarize and Mahindra Teqo (see Ex-Reliance RE Resource Joins Mahindra Group).