Canada’s Brookfield Asset Management Inc. has signed an exclusivity agreement to buy Mahindra Susten’s engineering, procurement and construction (EPC) business, besides 1,200 megawatts (MW) of solar assets, at an enterprise value of around ₹5,000 crore, two people aware of the development said.
About half these solar assets are currently under construction, the people cited above said, requesting anonymity. The enterprise value of a firm is calculated on the basis of market capitalization, debt and cash reserves.
Mahindra Susten was earlier running two separate programmes to divest its assets—one comprising the sale of 600MW under-construction solar projects and the EPC business that was managed by EY. Rothschild was handling a separate sale of its operational 600MW solar assets.
“Now, it is all one deal and Brookfield has got exclusivity on it,” said one of the two people cited above.
Spokespersons for Mahindra Susten, Brookfield Asset Management and EY declined to comment. An external spokesperson for Rothschild, in an emailed response, said, “Rothschild has no comment to offer with regards to this market speculation.”
Mahindra Susten’s plans underscore those of its parent Mahindra and Mahindra Ltd, which has unveiled a wide range of steps to unlock value in its units by bringing in new investors.
Mahindra Susten, which builds and sells solar power projects, offers diversified services in the renewable energy and cleantech space.
In February last year, it sold about 160MW of solar projects to CLP India. Its portfolio comprises 1,569MW of solar power projects.
With more than $575 billion in assets under management, Brookfield has invested about $20 billion in India so far. While private equity firm Actis Llp, among others, was also in the fray for Mahindra Susten’s EPC business and under-construction 600MW solar assets, the operational projects saw interest from India’s National Investment and Infrastructure Fund (NIIF) and the Canada Pension Plan Investment Board (CPPIB).
Valuations have started to recover in India’s green energy deals space to pre-covid levels, with yield-seeking funds and financial investors flush with capital driving up prices.
Meanwhile, solar tariffs in India hit a record low of ₹1.99 per unit at a recent auction conducted by Gujarat Urja Vikas Nigam Ltd. The rates are expected to fall further.
The potential Mahindra Susten deal comes at a time when India’s electricity demand scaled a new peak of 189.6 gigawatts on 30 January this year.
The sector is seeing companies enter the green energy generation business, considering that India’s per capita power consumption is about 1,149 kilowatt-hour, much lower than the world’s per capita consumption of 3,600 kWh, leaving ample potential for growth.
