Canada’s Brookfield Asset Management Inc. is looking to buy a substantial stake in Mahindra Susten, two people aware of the development said.
Avendus Capital is running the sales process for the potential deal with an enterprise and equity value of around ₹7,000 crore and ₹1,700 crore, respectively, the people said, requesting anonymity. Mahindra Susten has a growing engineering, procurement and construction (EPC) business, besides 1.5 gigawatts (GW) of solar assets.
“Brookfield is looking to buy a significant stake in Mahindra Susten at the holding company level. This includes EPC, utilities and C&I (commercial and industrial) business,” said one of the two people cited above.
Brookfield has over $20 billion assets under management in India and more than $690 billion in assets globally.
Mahindra Susten builds and sells solar power projects and also offers diversified services in the renewable energy and cleantech space. The development follows parent Mahindra and Mahindra Ltd’s earlier announcement to unlock value in its units, including Mahindra Susten, by bringing in new investors.
The sale process saw participation from companies, including Torrent Power, European alternative asset manager EQT and Temasek backed O2 Power, and Amplus Energy; and follows an earlier bid by Brookfield to buy Mahindra Susten. Mint reported on 9 February 2021 about Brookfield Asset Management signing an exclusivity agreement to buy Mahindra Susten’s business.
“Mahindra Susten is one of our growth gems. It is a key contributor to our global leadership in climate change. We have no plans to give up majority but will consider partners who can help us grow the business faster,” said a Mahindra Group spokesperson in an emailed response.
Spokespeople for Brookfield Asset Management and Avendus Capital declined to comment.
There is a continuing interest in the Indian green energy space amid a growing focus on environmental, social and governance (ESG) investing. At the COP-26 summit in Glasgow last November, India announced plans to boost non-fossil fuel power generation capacity to 500GW by 2030.
Sanjeev Aggarwal, founder and managing director of Amplus, declined to comment. Queries emailed to the spokespeople for Torrent Power on Saturday, and O2 Power on Sunday also remained unanswered.
Mahindra Susten earlier ran two separate programmes to divest its assets—one managed by EY to sell its under-construction solar projects and the EPC business, and the other handled by Rothschild to sell its operational solar assets. While private equity firm Actis Llp, among others, were earlier in the fray for Mahindra Susten’s EPC business and under-construction solar assets, the operational projects saw interest from India’s National Investment and Infrastructure Fund (NIIF) and the Canada Pension Plan Investment Board (CPPIB). Mahindra Susten sold about 160MW of solar projects to CLP India in February 2020.
At the COP26 summit, Prime Minister Narendra Modi pledged to meet half of India’s energy needs from renewable energy by 2030 and cut India’s carbon emission by 1 billion tonnes by 2030.
As reported by Mint earlier, India is also working on a so-called ‘green tariff’ for consumers who wish to procure their entire power needs from renewable energy sources. The plan proposes to help electricity distribution companies leverage prevailing low tariffs from solar and wind power projects compared to conventional fuel sources such as coal.
Also, the Union budget presented last month made an additional allocation of ₹19,500 crore for the production-linked incentive (PLI) scheme for the manufacturing of high-efficiency solar modules.
This is in addition to the ₹4,500 crore PLI scheme for solar photovoltaic modules that was announced earlier and was expected to add 10GW capacity of integrated solar PV manufacturing plants and bring a direct investment of around ₹17,200 crore.
