Canada-based Ontario Teachers’ Pension Plan Board (OTPP) will buy a 30 per cent stake in Mahindra Group’s renewable energy platform Mahindra Susten for Rs 711 crore. The parties have signed binding agreements pursuant to which Ontario Teachers’ will buy the Mahindra Susten stake at an equity value of Rs 2,371 crore.
According to regulatory filings, Mahindra Susten and OTPP’s arm 2452991 Ontario Ltd (2OL) have signed share purchase agreement and shareholders’ agreement under the strategic partnership. Mahindra Susten includes renewable engineering, procurement and construction businesses with capacity constructed of over 4 GWp and an independent power producer business with about 1.54 GWp of operational solar plants. OTPP is a global investor with net assets of C$242.5 billion.
The companies will also set up an infrastructure investment trust (InvIT), including renewable power assets seeded by Mahindra Susten with operational capacities of about 1.54 GWp, by FY24, Mahindra Group said in a regulatory update.
“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 green energy plants,” it added.
Consequent to the stake sale, Mahindra Susten would cease to be a wholly-owned subsidiary of Mahindra Holdings. However, with the latter holding more than 50 per cent of equity share capital, the platform would continue to be a subsidiary.
As part of the deal, shareholder loans of Rs 575 crore advanced by Mahindra Group to the platform would also be repaid. After the deal, Mahindra Group will receive about Rs 1,300 crore (sale of 30 per cent stake and repayment of loans). It will deploy Rs 3,050 crore (Rs 1,300 crore from the stake sale and an additional Rs 1,750 crore) into the business and InvIT over the next seven years. On its part, OTPP will infuse an additional amount of up to Rs 3,550 crore during the same period.
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Mahindra will also sell an additional 9.99 per cent stake in Mahindra Susten to any investor, or 2OL, by May 31, 2023, based on mutually agreed considerations, the statement added.
“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. Mahindra Group aims to be Planet Positive by 2040 and the continued inflow of patient, long-term capital in our climate positive businesses is validation of our commitment to be a global Environmental, Social and Governance leader,” said Puneet Renjhen, member of group executive board and executive vice president—partnerships & alliances at Mahindra Group. FE
