Major Canadian pension fund Ontario Teachers' Pension Plan has signed binding agreements to buy 30 percent of Mahindra group's renewables arm at an equity value of Rs 2,371 crore ($300 million).
The deal for Mahindra Susten also entails setting up an infrastructure investment trust. The InvIT will initially boast renewable power assets seeded by Mahindra Susten with operational capacity of around 1.54 GWp. As part of the transaction, shareholder loans of Rs 575 crore ($73 million) advanced by Mahindra group to the renewables arm will be repaid.
Also, Mahindra Group will receive an inflow of about Rs 1,300 crore ($ 165 million) resulting from this transaction. The group and Ontario Teachers’ will jointly explore the sale of an additional 9.99 percent stake in Mahindra Susten by 31 May 2023.
The group will deploy these funds, plus an amount of up to Rs 1,750 crore ($220 million), into the business and InvIT over the next seven years.
Over the same period, Ontario Teachers’ has committed to deploy an additional amount of up to Rs 3,550 crore ($450 million) into Mahindra Susten and the InvIT.
This transaction will enable Mahindra Susten to build a strong renewable energy business focused on solar energy, hybrid energy, integrated energy storage and round-the-clock green energy plants.The Ontario Teachers’ acquisition of a 30 percent shareholding in Mahindra Susten, which is subject to closing conditions including regulatory approvals, will close over the next few months. The InvIT is expected to come up during financial year 2024 subject to requisite approvals.