Mahindra Group and Ontario Teachers' Pension Plan Board, a Canadian fund, said on Sunday that Ontario Teachers would acquire a 30 percent stake in Mahindra Susten, the renewable energy platform, at an equity value of Rs 2,371 crore.

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As part of the transaction, an Infrastructure Investment Trust (InvIT) will be established. InvIT is initially proposed to comprise renewable power assets seeded by Mahindra Susten with a capacity of approximately 1.54 GW.

A shareholder loan of Rs 575 crore advanced by Mahindra Group to Mahindra Susten will be repaid as part of the proposed transaction.

This transaction will result in Mahindra Group receiving approximately Rs 1,300 crore in inflow, according to the statement.

Mahindra Group and Ontario Teachers’ will jointly explore the sale of an additional 9.99 percent stake in Mahindra Susten by May 31, 2023.

Mahindra Group will deploy these funds, plus an incremental amount of up to Rs 1,750 crore into the business and InvIT over the next seven years, the statement added.

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Additionally, Ontario Teachers’ has committed to deploy an additional amount of up to Rs 3,550 crore into the business and the InvIT.

“We are delighted to welcome Ontario Teachers’ as a strategic partner in Mahindra Susten. 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," said Puneet Renjhen, Member of Group Executive Board and EVP, Partnerships & Alliances at the Mahindra Group.

As a result of this transaction, Mahindra Susten will be able to build a strong renewable energy business focused on solar energy, hybrid energy, integrated energy storage, and round-the-clock (RTC) green energy plants.

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“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," said Bruce Crane, Senior Managing Director, Asia Pacific, Infrastructure & Natural Resources at Ontario Teachers’.

As per the updated Nationally Determined Contributions (NDCs) of the United Nations Framework Convention on Climate Change (UNFCCC), India now stands committed to reducing the emissions intensity of its GDP by 45 percent by 2030 from its 2005 levels and achieving about 50 percent cumulative electric power installed capacity from non-fossil fuel-based energy resources by 2030. These are concrete steps towards achieving India’s long-term goal of reaching net zero by 2070, said the statement.

Avendus Capital acted as financial advisor to the

Mahindra Group for the transaction.

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First Published:Sept 18, 2022 11:52 AM IST