Mahindra Susten has sold 30 per cent stake at an equity value of Rs 2,371 crore ($300 million) to Ontario Teachers’ Pension Plan Board. Mahindra Group and Ontario Teachers’ will also jointly explore the sale of an additional 9.99 per cent stake in Mahindra Susten by May 31, 2023.
The proposed investment would also include setting up of an Infrastructure Investment Trust (InvIT) for listing renewable energy assets. The company expects to float the InvIT by 2024.
Mahindra Susten is the renewable energy firm of the Mahindra Group. It is an independent power producer with 1.5 Gw capacity and also is into the engineering, procurement and construction (EPC) business, with a constructed capacity of 4 Gw.
The move follows the decision at the Mahindra group level in 2020, to take its 10 companies public and unlock their value for its shareholders. This includes its footprint in mobility, clean energy, rural, financial services, infrastructure and technology, among others.
The company in its public statement said that the Mahindra Group will deploy these funds, along with 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 over the next seven years,” the company said.
“As part of the proposed transaction, shareholder loans of Rs 575 crore ($73 million) advanced by the Mahindra Group to Mahindra Susten will be repaid,” said the company. As a result of this transaction, Mahindra Group will receive an inflow of approximately Rs 1,300 crore ($165 million). The proposed InvIT would initially consist of renewable power assets seeded by Mahindra Susten with operational capacity of around 1.54 GWp.
“This transaction will enable Mahindra Susten to build a strong renewable energy business focused on solar energy, hybrid energy, integrated energy storage & round-the-clock (RTC) green energy plants,” said the company.
Deepak Thakur, managing director & chief executive officer, Mahindra Susten said: “This platform will leverage our proven experience in development and deep knowledge of the Indian energy market. Our in-house EPC capabilities honed across renewable energy projects executed globally ensure Mahindra Susten engineers and delivers superior performing assets.”
“The Mahindra Group aims to be “Planet Positive by 2040”, and the continued inflow of patient, long-term capital in our climate positive businesses validates our commitment to be a global ESG leader,” said Puneet Renjhen, member of group executive board and Executive Vice=President, Partnerships & Alliances, Mahindra Group.
Bruce Crane, Senior Managing Director, Asia Pacific, Infrastructure & Natural Resources at Ontario Teachers’ said, “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.”
Ontario Teachers’ Pension Plan Board is a global investor with net assets of C$242.5 billion and exposure in close to 50 countries.