Mahindra Group has announced its strategic partnership with the Ontario Teachers’ Pension Plan Board, under which the latter will acquire a 30% equity stake in Mahindra Susten at an equity value of INR 2,371 crore ($300 million) under the deal. This deal will help Mahindra Group to capitalise on the growing renewables opportunity in India and contribute to the country’s decarbonisation ambitions.
As part of the proposed transaction, shareholder loans of INR 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 INR 1,300 crore ($165 million).
A press release from the company noted that both parties 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 INR 1,750 crore ($220 million), into the business & InvIT over the next seven years.
Over the same period, Ontario Teachers’ has committed to deploy an additional amount of up to INR 3,550 crore ($450 million) into the business and the InvIT over the next seven years, the release added.
Additionally, the proposed transaction also envisages the setting up of an Infrastructure Investment Trust (“InvIT”) in compliance with applicable regulations of the Securities and Exchange Board of India.
Notably, the InvIT is initially proposed to comprise renewable power assets seeded by Mahindra Susten with an operational capacity of around 1.54 GWp.
Interestingly, it is expected that Ontario Teachers’ acquisition of a 30% shareholding in Mahindra Susten, which is subject to closing conditions, including regulatory approvals, will complete over the next few months, while the InvIT is also expected to be formed during FY24 subject to requisite approvals.
Deepak Thakur, Managing Director & Chief Executive Officer, Mahindra Susten, said that the partnership with Ontario Teachers’ syncs with Mahindra Susten’s plan to substantially grow its green energy portfolio across solar PV, wind, and energy storage.
Puneet Renjhen, Member of Group Executive Board and EVP, Partnerships & Alliances, Mahindra Group, noted, “Mahindra Group aims to be Planet Positive by 2040, and the continued inflow of patient, long-term capital in its ur climate-positive businesses is validation of our commitment to be a global ESG leader.”
Bruce Crane, Senior Managing Director, Asia Pacific, Infrastructure & Natural Resources, 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.”