Ontario Teacher's Pension Plan, a global investor, is set to acquire a 30% equity stake in Mahindra Susten, a cleantech arm of the Mahindra Group. This strategic move involves an equity value of ₹23.71 billion (-$300 million) and adheres to the regulations of the Securities and Exchange Board of India by establishing an Infrastructure Investment Trust (InvIT).
Initially, the proposed InvIT will encompass renewable power assets with an operational capacity of approximately 1.54 GW, seeded by Mahindra Susten. Additionally, Mahindra Group's shareholder loans totalling ₹5.75 billion (-$73 million) advanced to Mahindra Susten will be duly repaid.
A substantial influx of funds will transpire as Mahindra Group will receive around ₹17.5 billion (-$220 million) from Mahindra Group, while Ontario Teachers' contribution will reach up to ₹35.5 billion (-$450 million) for seven years, fortifying the business and InvIT.
Mahindra Group and Ontario Teachers jointly explored the sale of an additional 9.99% stake in Mahindra Susten, and this exploration was intended to conclude by May 31, 2023.
Subject to the necessary approvals, the InvIT is anticipated to take shape during FY 2024.
According to Deepak Thakur, Managing Director and Chief Executive Officer of Mahindra Susten, "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, thereby enabling our energy platform to provide clean, reliable power to millions of people across India."
Chris Ireland, Senior Managing Director of Greenfield Investments & Renewables, Infrastructure & Natural Resources at Ontario Teachers' Pension Fund, stated, "The renewable energy sector in India is poised for significant growth in the coming years as India works towards its ambitious clean energy goals, and we are excited to partner with the Mahindra Group in this initiative."
In a significant achievement earlier this year, Mahindra Susten successfully commissioned a 175 MW solar project in Kolayat, situated within the Bikaner district of Rajasthan. Notably, Mahindra Susten was prominently ranked among the top five utility-scale solar developers in India, as highlighted by Mercom's India Solar Market Leaderboard 2022. The company further established itself as one of the top companies in utility-scale solar engineering, procurement, and construction services in 2021.