Canada’s Ontario Teachers’ Pension Plan Board has signed a binding agreement to acquire a 30% stake in the Indian renewable energy company Mahindra Susten for a consideration of $300m.
As per the terms of the agreement, the two companies have agreed to set up an Infrastructure Investment Trust (InvIT), with a 1.5GWp renewable energy portfolio seeded by Mahindra Susten.
Ontario Teachers’ Asia Pacific Infrastructure and Natural Resources senior managing director Bruce Crane said: “We are pleased to continue making significant investments in India and to acquire a meaningful stake in Mahindra Susten, one of India’s leading renewable energy platforms.
“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.”
Under the proposed transaction, shareholder loans worth Rs5.75bn ($73m) advanced by Mahindra Group to Mahindra Susten will be repaid.
By 31 May 2023, Mahindra Group and Ontario Teachers’ will also explore the sale of an additional 9.99% stake in Mahindra Susten.
Over the next seven years, Mahindra Group will invest up to Rs1.75bn ($220m) in InvIT, while Ontario Teachers’ has committed Rs.35.5bn ($450m).
The deal will allow Mahindra Susten to build a strong renewable energy business in the country that will focus on solar energy, hybrid energy, integrated energy storage as well as the round-the-clock green energy plant.
Subject to regulatory approvals and closing conditions Ontario Teachers’ acquisition of 30% stake in Mahindra Susten is expected to close over the next few months.
The creation of InvIT is also expected to be formed during FY2024 subject to requisite approvals.
Mahindra Susten managing director and CEO Deepak Thakur said: “This partnership with Ontario Teachers’ syncs with Mahindra Susten’s plan to substantially grow our green energy portfolio across solar PV, wind, and energy storage.
“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.”