Leading Canadian fund Ontario Teachers’ Pension Plan Board (Ontario Teachers’) will acquire a 30% stake in Mahindra Susten, the renewable energy platform, for Rs 2,371 crore ( $300 million), said Ontario Teachers’ statement.
The proposed transaction also envisages the setting up of an Infrastructure Investment Trust (InvIT). The InvIT is initially proposed to comprise renewable power assets seeded by Mahindra Susten with operational capacity of around 1.54 GW.
ET first reported in June on Ontario Teachers’ plans to acquire minority stake in Mahindra Susten.
As part of the proposed transaction, shareholder loans of Rs 575 crore ($73 million) advanced by Mahindra Group to Mahindra Susten will be repaid. As a result of this transaction, Mahindra Group will receive an inflow of approximately Rs 1,300 crore ($165 million), said the statement.
Mahindra Group and Ontario Teachers’ will jointly explore the sale of an additional 9.99% stake in Mahindra Susten by May 31, 2023. Mahindra Group will deploy these funds, plus an incremental amount of up to Rs 1,750 crore ($ 220 million), into the business and InvIT over the next seven years.
Over the same period, Ontario Teachers’ has committed to deploy an additional amount of up to Rs 3,550 crore ($ 450 million) into the business and the InvIT.
This transaction will enable Mahindra Susten to build a strong renewable energy business focused on solar energy, hybrid energy, integrated energy storage and round-the-clock (RTC) green energy plants, added the statement.
“We are delighted to welcome Ontario Teachers’ as a strategic partner in Mahindra Susten. 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,” said Puneet Renjhen, Member of Group Executive Board and EVP, Partnerships & Alliances at the Mahindra Group.
“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. This strategic partnership marks the beginning of what we hope will be a long-term and mutually beneficial relationship with the Mahindra Group,” said Bruce Crane, Senior Managing Director, Asia Pacific, Infrastructure & Natural Resources at Ontario Teachers’.
As per the updated Nationally Determined Contributions (NDCs) of the United Nations Framework Convention on Climate Change (UNFCCC), India now stands committed to reducing the emissions intensity of its GDP by 45% by 2030 from its 2005 levels, and achieve about 50% cumulative electric power installed capacity from non-fossil fuel-based energy resources by 2030. These are concrete steps towards achieving India’s long-term goal of reaching net-zero by 2070, said the statement.
Avendus Capital acted as financial advisor and Khaitan & Co. acted as legal advisor to the Mahindra Group for the transaction.
