Mahindra Group and Ontario Teachers’ Form Strategic Renewable Energy Partnership
Mumbai, September 17, 2022: Mahindra Group and the Ontario Teachers’ Pension Plan Board (“Teachers”) today announced a strategic partnership to capitalize on the growing renewable energy opportunity in India and contribute to the ambitions of decarbonization of the country. The parties have signed binding agreements under which Ontario Teachers’ will acquire a 30% stake in Mahindra Susten Private Limited (“Mahindra Susten”) for a net worth of INR 2,371 crore (~US$300 million).
The contemplated transaction also provides for the establishment of an Infrastructure Investment Trust (“InvIT”) in accordance with applicable regulations of the Securities and Exchange Board of India. The InvIT is initially proposed to comprise renewable energy assets seeded by Mahindra Susten with an operational capacity of approximately 1.54 GWp. Under the proposed transaction, shareholder loans of INR 575 crore (~USD 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 (~USD 165 million). Mahindra Group and Ontario Teachers’ 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 additional amount of up to INR 1,750 crore (~220 million), in the company and InvIT over the next seven years.
During the same period, Ontario Teachers’ has pledged to deploy an additional amount of up to INR 3,550 crore (~USD 450 million) in the business and InvIT.
This transaction will enable Mahindra Susten to build a strong renewable energy business focused on solar power, hybrid power, integrated energy storage and 24-hour green power (“RTC”) power plants.
Puneet Renjhen, Group Board Member and Executive Vice President, Partnerships and Alliances of Mahindra Group said: “We are delighted to welcome Teachers’ as a strategic partner of Mahindra Susten. The partnership with Ontario Teachers’ will enable the Mahindra Group to unlock value in the renewable energy sector through continued joint investments for accelerated growth. The Mahindra Group aims to be Planet Positive by 2040 and the continued influx of patient and long-term capital into our climate positive activities is validation of our commitment to be a global ESG leader.
Bruce Crane, Senior Managing Director, Asia-Pacific, Infrastructure and Natural Resources at Ontario Teachers’ said“We are delighted to continue to make significant investments in India and to acquire a significant stake in Mahindra Susten, one of India’s leading renewable energy platforms. As part of our climate change strategy, we are committed to continuing to grow our portfolio of green assets around the world 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.
Deepak Thakur, Managing Director and CEO, Mahindra Susten said: “This partnership with Ontario Teachers’ aligns with Mahindra Susten’s plan to significantly grow our green energy portfolio through solar PV, wind and energy storage. This platform will leverage our proven development experience and in-depth knowledge of the Indian energy market. Our in-house EPC capabilities, honed in renewable energy projects executed around the world, ensure Mahindra Susten engineers deliver superior performance assets, enabling our energy platform to deliver clean, reliable power to million people across India.
Chris Ireland, Senior Managing Director, Greenfield Investments & Renewables, Infrastructure & Natural Resources at Ontario Teachers’ said: “We are proud to invest in one of India’s leading renewable energy platforms. We believe India’s renewable energy sector is poised for significant growth in the coming years as India strives to meet its ambitious clean energy targets, and we are delighted to partner with the Mahindra Group in this initiative.
In line with the updated Nationally Determined Contributions (“NDCs”) of the United Nations Framework Convention on Climate Change (“UNFCCC”), India now commits to reducing the emissions intensity of its GDP by 45% by 2030 compared to its 2005 levels, and to reach around 50% of the cumulative installed electric power capacity from non-fossil energy resources by 2030. These are concrete steps towards achieving India’s long-term goal of reaching net zero by 2070. As a result, India’s renewable energy industry is expected to continue to grow significantly in the long term.
Ontario Teachers’ acquisition of a 30% interest in Mahindra Susten, which is subject to closing conditions, including regulatory approvals, is expected to be completed in the coming months. The InvIT is also expected to be formed in FY2024 subject to required approvals.
Avendus Capital acted as financial advisor and Khaitan & Co. acted as legal advisor to Mahindra Group for the transaction. Ambit acted as financial advisor and Cyril Amarchand Mangaldas acted as legal advisor to Ontario Teachers’ on the transaction.
About Mahindra Group
Founded in 1945, the Mahindra Group is one of the largest and most admired multinational business federations with 260,000 employees in over 100 countries. It enjoys a leading position in agricultural equipment, utility vehicles, information technology and financial services in India and is the world’s largest tractor company by volume. It has a strong presence in renewable energies, agriculture, logistics, hotels and real estate.
The Mahindra Group has a clear focus on ESG leadership on a global scale, enabling rural prosperity and improving urban life, with the aim of bringing about positive changes in the lives of communities and stakeholders to enable them to rise .
Learn more about Mahindra at www.mahindra.com / Twitter and Facebook: @MahindraRise/ For updates, subscribe at https://www.mahindra.com/news-room
About Mahindra Susten
Mahindra Susten is the renewable energy platform of the Mahindra Group, which includes one of the main engineering, procurement and construction (“EPC”) activities of renewable energy (built capacity of more than 4 GWp ), an Independent Power Producer (“IPP”) business with approximately 1.54 GWp. of operational solar power plants spread across several states in India and plan to have a large solar development pipeline. The IPP solar portfolio is spread across 5 key states in India and is backed by long-term power purchase agreements – approximately 75% of the assets are backed by central government entities and the remainder by backed distribution companies by state governments. In addition to its own in-house management team with extensive capabilities in EPC and IPP, Mahindra Susten also benefits from the solar power plant operation and maintenance services and other technical expertise of Mahindra Teqo Private Limited. For more information visit https://www.mahindrasusten.com
The Ontario Teachers’ Pension Board is a global investor with net assets of C$242.5 billion as of June 30, 2022. We invest in more than 50 countries in a wide range of assets including public and private equities, fixed income, credit, commodities, natural resources, infrastructure, real estate and venture capital growth to provide a retirement income to 333,000 active and retired members.
With offices in Hong Kong, London, Mumbai, San Francisco, Singapore and Toronto, our more than 350 investment professionals bring deep expertise in sectors ranging from agriculture to artificial intelligence. We are a fully funded defined benefit pension plan and have earned a total annual net return of 9.6% since the plan’s inception in 1990. At Ontario Teachers’, we don’t just invest to make a return, we invest to shape a better future for the teachers we serve, the businesses we support and the world we live in. For more information, visit otpp.com and follow us on Twitter @OtppInfo
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