Shareholders approve $8 billion ReNew Power SPAC deal; Nasdaq trading may begin on August 24

A majority of 88 percent of shareholders have given the nod to the mega $8 billion SPAC transaction between Goldman Sachs and CPP Investments-backed top clean energy player ReNew Power Private Ltd and RMG Acquisition Corporation II, paving the way for a Nasdaq listing. The combined entity’s shares are expected to begin trading on the Nasdaq on August 24, 2021, according to an official statement.

On August 6, Moneycontrol was the first to report that the transaction had received a key regulatory nod from the US SEC (Securities Exchange Commission).

This is a landmark transaction as it represents the biggest overseas listing of an Indian company via the SPAC (special purposed acquisition company) route, which has been a smash hit on Wall Street over a major part of the last 18 months.

An official statement, released late on August 16 said, “RMG Acquisition Corporation II, a publicly-traded special purpose acquisition company, today announced that its stockholders voted to approve the previously announced business combination with ReNew Power Private Ltd and all other proposals presented at RMG II’s extraordinary general meeting of shareholders  held on August 16, 2021.”

“Approximately 88 percent of the votes cast on the business combination proposal at the Extraordinary General Meeting were in favour of approving the business combination proposal,” the statement added.

Ahead of the SPAC vote, ReNew Power had announced the acquisition of 359 MWs of hydropower and solar power assets for $384 million.

A SPAC or special purpose acquisition vehicle is a shell company and its sole aim is to raise capital via an IPO (initial public offering) to acquire a private business at a later date and then take it public without going through the traditional route of IPOs. In the above transaction, RMG Acquisition Corporation II is one such shell company.

SPAC structure deals are not entirely new to Indian companies. For instance, in 2015, Silver Eagle Acquisition, a SPAC acquired a 30 percent stake in Videocon d2h for around 200 million. In 2016, Yatra Online, the parent company of Yatra India, listed on NASDAQ, by way of a reverse-merger with another US-based SPAC, Terrapin 3 Acquisition.

Moneycontrol had demystified the theme of SPAC’s in an explainer dated February 7, 2021.

According to the official announcement of the SPAC transaction on February 24, 2021, the pro forma consolidated and fully diluted market capitalisation of the combined company would be approximately $4.4 billion at the $10 per share PIPE (private investment in public equity) subscription price, assuming no RMG II shareholders exercise their redemption rights. Gross cash proceeds are estimated to be approximately $1.2 billion, comprised $855 million from the PIPE and approximately $345 million of cash held in trust by RMG II, before any adjustments due to potential redemptions by RMG II shareholders.

The transaction would further strengthen ReNew’s position in solar and wind energy generation for the Indian market, by funding medium-term growth opportunities. The proceeds would be used to support ReNew’s growth strategy, including the buildout of its contracted, utility-scale renewable power generation capacity, as well as to reduce debt.

ReNew’s leadership will remain intact, with Sumant Sinha as Chairman & Chief Executive Officer of the combined company, overseeing its strategic growth initiatives and expansion.

As part of the deal, ReNew’s management, and its shareholders, including Goldman Sachs, the Canada Pension Plan Investment Board (CPP Investments), Abu Dhabi Investment Authority, and JERA Co., Inc. (JERA), among others would roll a majority of their equity into the new company, and are expected to represent approximately 70% of the effective company ownership upon transaction close.

Recently, Sebi chairman Ajay Tyagi had said the market regulator is discussing ways to create and develop a SPAC (special purpose acquisition company) market in India.