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NEW DELHI : Ontario Teachers’ Pension Plan Board has signed binding agreements with the Mahindra Group to acquire a 30% stake in renewable energy firm Mahindra Susten Pvt. Ltd for an equity value of 2,371 crore ($300 million).

The Mahindra Group said the deal also envisages the setting up of an infrastructure investment trust (InvIT) in compliance with regulations of the Securities and Exchange Board of India.

Avendus Capital acted as financial adviser to the Mahindra Group for the transaction, and Ambit was the financial adviser to Ontario Teachers’.

The InvIT, expected to be formed in FY2024, will initially comprise renewable power assets seeded by Mahindra Susten with an operational capacity of around 1.54GW. As part of the deal, shareholder loans of 575 crore advanced by the Mahindra Group to Mahindra Susten will be repaid.

“Mahindra Group and Ontario Teachers’ Pension Plan Board (Ontario Teachers’) announced a strategic partnership to capitalize on the growing renewables opportunity in India and contribute towards the country’s decarbonization ambitions," it said. As a result of this transaction, the Mahindra Group will receive around 1,300 crore.

Further, the Mahindra Group and Ontario Teachers’ will jointly explore the sale of an additional 9.99% stake in Mahindra Susten by 31 May 2023. The Group will deploy these funds, plus an incremental amount of up to 1,750 crore, into the business and the InvIT over the next seven years.

Over the same period, Ontario Teachers’ will deploy an additional amount of up to 3,550 crore into the business and the InvIT.

The statement added that the transaction would enable Mahindra Susten to build a strong renewable energy business focused on solar energy, hybrid energy, integrated energy storage and round-the-clock (RTC) green energy plants. It is expected that Ontario Teachers’ acquisition of a 30% shareholding in Mahindra Susten, which is subject to closing conditions, including regulatory approvals, will be completed over the next few months.

Puneet Renjhen, member of the group executive board and EVP, Partnerships & Alliances at the Mahindra Group, said: “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. The Mahindra Group aims to be Planet Positive by 2040, and the continued inflow of patient, long-term capital in our climate-positive businesses is a validation of our commitment to being a global ESG leader."

Bruce Crane, senior managing director, Asia Pacific, Infrastructure & Natural Resources at Ontario Teachers’ added, “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."

Deepak Thakur, managing director and chief executive of Mahindra Susten, said the partnership with Ontario Teachers’ syncs with Mahindra Susten’s plans to substantially grow its green energy portfolio across solar PV, wind, and energy storage.

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