Ontario Teachers' to buy 30% of Indian solar group Mahindra Susten

Ontario Teachers' Pension Plan Board has agreed to acquire a 30% stake in Indian solar installer Mahindra Susten Pvt Ltd, a unit of automotive group Mahindra & Mahindra (NSE:M&M), in a deal with an equity value of INR 23.7 billion (USD 397.1m/EUR 298m).

The Canadian pension fund said on Friday it has sealed binding agreements for the purchase and agreed to establish an infrastructure investment trust (InvIT) with its Indian partner. The new vehicle will be launched with a 1.5-GWp renewable energy portfolio seeded by Mahindra Susten.

As part of the deal, INR 5.75 billion of loans advanced by Mahindra Group to Mahindra Susten will be repaid. Mahindra Group may offload an additional 9.99% stake in the solar engineering, procurement and construction (EPC) firm to Ontario Teachers’. The potential deal could be executed by May 31, 2023, with funds from it to be channelled into the InvIT unit.

Over the next seven years, Mahindra Group will inject an additional INR 17.5 billion into the joint business, while the Canadian pension fund will contribute up to INR 35.5 billion.

“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 Mahindra Group.

Ontario Teachers expects to wrap up the acquisition over the next few months. The creation of the InvIT is pending regulatory clearance and is expected to be finalised in fiscal 2024.

(INR 10 = USD 0.125/EUR 0.126)

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