Canada-based Ontario Teachers’ Pension Plan Board (OTPP) will acquire a 30 per cent stake in Mahindra Susten, Mahindra Group’s renewable energy platform, for Rs 711 crore. The parties have signed binding agreements whereby Ontario Teachers’ will purchase Mahindra Susten’s 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 a share purchase agreement and shareholder agreement as part of the strategic partnership. Mahindra Susten comprises renewable energy engineering, procurement and construction companies with over 4 GWp of capacity and an independent power generation company with approximately 1.54 GWp of operating solar assets. OTPP is a global investor with net assets of CA$242.5 billion.
The companies will also establish an Infrastructure Investment Trust (InvIT), including renewable energy assets established by Mahindra Susten with operational capacities of approximately 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 power, hybrid power, integrated energy storage and 24/7 green energy facilities,” it added.
After the stake sale, Mahindra Susten would no longer be a wholly owned subsidiary of Mahindra Holdings. However, since the latter hold more than 50 percent of the share capital, the platform would still be a subsidiary.
As part of the transaction, shareholder loans of Rs 575 crore made by Mahindra Group to the platform would also be repaid. After the transaction, Mahindra Group will receive approximately Rs 1,300 crore (sale of 30 percent stake and repayment of loans). It will invest Rs 3,050 crore (Rs 1,300 crore from the sale of shares and a further 1,750 crore) in the business and InvIT over the next seven years. For its part, OTPP will infuse an additional amount of up to Rs 3,550 crore over the same period.
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Mahindra will also sell an additional 9.99 percent interest 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 for accelerated growth. Mahindra Group aspires to be Planet Positive by 2040 and the continued inflow of patient, long-term capital into our climate-friendly businesses is a validation of our commitment to be a global environmental, social and governance leader,” said Puneet Renjhen, Member of the Corporate Executive Board and Executive Vice President – Partnerships and Alliances at Mahindra Group. FE
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