Canadian Pension Fund Invests In Indian RE Sector

• Mahindra Group and Ontario Teachers' have launched an InvIT with an offer size of INR 22.63 billion 
• The SEIT InvIT will focus on the growth of Indian renewable energy sector; it is listed on the NSE 
• Mahindra Susten has provided seed assets of 1.54 GW to SEIT and also committed to a ROFO to sell its future assets to the vehicle 

Indian automotive manufacturing company Mahindra Group and Canada's Ontario Teachers' Pension Plan Board have launched what they term the 'largest' infrastructure investment trust (InvIT) in the Indian renewable energy space. It will focus on the growth of the renewable energy sector in India at scale. 

The InvIT Sustainable Energy Infra Trust (SEIT) has an offer size of INR 22.63 billion ($273 million), and has raised primary capital of INR 13.65 billion ($165 million) as part of the initial offer of units subscribed by investors including the Asian Infrastructure Investment Bank (AIIB). 

Listed on the National Stock Exchange of India Limited (NSE), SEIT has close to 1.54 GW of operational renewable energy assets from Mahindra Group's renewable energy arm Mahindra Susten, purchased for INR 8.98 billion ($108 million). Mahindra Susten will use the proceeds to develop its future pipeline. 

SEIT also gets a right of first offer (ROFO) to buy any future assets developed by Mahindra Susten. 

Both Mahindra Group and Ontario Teachers' had previously announced an investment of up to INR 30.5 billion ($368 million) and INR 35.5 billion ($428 million) into Mahindra Susten and SEIT, respectively. 

Ontario Teachers' signed a binding agreement to acquire a 30% equity stake in Mahindra Susten in September 2022 and planned to launch an InvIT back then (see Canadian Pension Fund Invests In Indian Solar Firm).  

"An InvIT as an instrument is investor friendly and attracts significant interest in operating renewable energy and infrastructure investments in India," said CEO of the Investment Manager to SEIT, Avinash Rao. "We are delighted to have strong sponsors such as Mahindra Group, Ontario Teachers' as well as AIIB and other marquee investors on board for current assets, and for building our pipeline of future assets."