Mumbai, September 17, 2022: Mahindra Group and the Ontario Teachers Pension Plan Board (“Ontario Teachers”) today announced a strategic partnership to capitalize on India’s growing renewables opportunities and contribute to the country’s decarbonization ambitions. The parties have signed binding agreements whereby Ontario Teachers will acquire a 30% equity stake in Mahindra Syston Private Limited (“Mahindra Syston”) at an equity price of INR 2,371 crore (~USD 300 million).
The proposed transaction also envisages the establishment of an Infrastructure Investment Trust (“InvIT”) in compliance with the applicable regulations of the Securities and Exchange Board of India. InvIT is initially proposed to consist of renewable power assets seeded by Mahindra Syston with an operational capacity of approximately 1.54 GWp. As part of the proposed transaction, Mahindra Group will repay shareholder loans of Rs 575 crore (~USD 73 million) to Mahindra Syston.
As a result of this transaction, the Mahindra Group will receive an inflow of approximately INR 1,300 crore (~USD 165 million). Mahindra Group and Ontario Teachers will jointly explore the sale of an additional 9.99 per cent stake in Mahindra Syston by May 31, 2023. In addition to these funds, Mahindra Group will deploy an additional amount of up to INR 1,750 crore ($220 million). in business and InvIT over the next seven years.
During the same period, Ontario Teachers has committed to deploy an additional amount of up to INR 3,550 crore (~USD 450 million) in business and InvIT.
The transaction will enable Mahindra Syston to build a strong renewable energy business focused on solar energy, hybrid energy, integrated energy storage and round-the-clock (“RTC”) green energy plants.
Puneet Renjan, Member Group Executive Board and EVP, Partnerships and Alliances at Mahindra Group said: “We are delighted to welcome Ontario Teachers as a strategic partner to Mahindra Systems. The partnership with Ontario Teachers will unlock value with continued co-investment for the Mahindra Group to accelerate growth in the renewable energy sector. The Mahindra Group aims to be Planet Positive by 2040 and the continued inflow of patient, long-term capital into our environmentally positive businesses is an affirmation of our commitment to be a global ESG leader.
Bruce Crane, Senior Managing Director, Asia Pacific, Infrastructure and Natural Resources at Ontario Teachers said: “We are pleased to continue making significant investments in India and acquire a meaningful stake in Mahindra Syston, one of India’s leading renewable energy platforms. As part of our climate change strategy, We are committed to continuing to grow our portfolio of green assets around the world with investments like Mahindra Sustin. This strategic partnership marks the beginning of what we hope will be a long-term partnership with the Mahindra Group. There will be long-term and mutually beneficial relationships.
Deepak Thakur, Managing Director and Chief Executive Officer, Mahindra Susten said: “This partnership with Ontario Teachers is in line with Mahindra Syston’s plans to significantly expand our green energy portfolio across solar PV, wind, and energy storage. This platform leverages our proven experience in developing and will leverage deep knowledge of the Indian energy market. Our in-house EPC capabilities in renewable energy projects executed globally ensure Mahindra systems engineers and delivers high-performing assets. , thereby enabling our energy platform to provide clean, reliable electricity to millions of people across India.
Chris Ireland, Senior Managing Director, Greenfield Investments and Renewables, Infrastructure and Natural Resources at Ontario Teachers said:We are proud to invest in one of India’s leading renewable energy platforms. We believe that the renewable energy sector in India is poised for significant growth in the coming years as India works towards its ambitious clean energy goals, and are excited to partner with the Mahindra Group in this initiative.
According to the latest Nationally Determined Contributions (“NDCs”) of the United Nations Framework Convention on Climate Change (“UNFCCC”), India is now committed to reducing its emissions intensity of GDP by 45% from 2005 levels by 2030. is committed to reducing by , and by 2030 achieve the capacity to install approximately 50% of total electric power from non-fossil fuel based energy sources. These are concrete steps towards achieving India’s long-term goal of reaching net zero by 2070. Consequently, the Indian renewables industry is expected to continue to grow significantly in the long term.
Ontario Teachers’ acquisition of a 30% shareholding in Mahindra Syston, subject to closing conditions including regulatory approvals, is expected to be completed within the next few months. InvIT is also expected to be formed during FY 2024 subject to requisite approvals.
Avendis Capital acted as financial advisor and Khaitan & Company acted as legal advisor to Mahindra Group for the transaction. Ambit acted as financial advisor and Cyril Amarchand Mangaldas acted as legal advisor to Ontario Teachers for the transaction.
About Mahindra Group
The Mahindra Group has a clear focus on leading ESG globally, enabling rural prosperity and enhancing urban livelihoods, aiming to positively transform the lives of communities and stakeholders to enable them to thrive.
About Mahindra Syston
Mahindra Susten is the Mahindra Group’s renewable energy platform, comprising a renewable engineering, procurement and construction (“EPC”) business (build capacity of more than 4 GWp), an independent power producer with approximately 1.54 GWp (” IPP”) includes business. Operational solar plants are spread across several states in India, and a significant solar development pipeline is planned. The IPP solar portfolio is spread across 5 major states in India and is backed by long-term power purchase agreements – about 75% of the assets are backed by central government entities and the rest by state distribution companies. Supported by governments. Apart from its in-house management team with extensive capabilities in both EPC and IPP domains, Mahindra also benefits from the operations and maintenance services of the Syston Solar Plant and other technical expertise of Mahindra Teco Pvt. For more information, visit https://www.mahindrasusten.com.
About Ontario Teachers
The Ontario Teachers’ Pension Plan Board (Ontario Teachers’) is a global investor with net assets of C$242.5 billion as of June 30, 2022. We invest in over 50 countries across a broad array of assets including public and private equity, fixed income. Credit, commodities, natural resources, infrastructure, real estate and venture development to provide retirement income for 333,000 working members and pensioners.
With offices in Hong Kong, London, Mumbai, San Francisco, Singapore and Toronto, our more than 350 investment professionals bring deep expertise in industries ranging from agriculture to artificial intelligence. We are a fully funded defined benefit pension plan and have achieved an annual total fund net return of 9.6% since inception of the plan in 1990. At Ontario Teachers, we don’t just invest for a return, we invest. A better future for the teachers we serve, the businesses we give back, and the world we live in. For more information, visit otpp.com and follow us on Twitter @OtppInfo
Media Contact Information:
Mahindra & Mahindra Limited
VP and Head – Group Communications
Email: [email protected]
Ontario Teachers Pension Plan Board
Director, External Communications
+1 416 419 1437