Ontario Teachers’ Pension Plan in talks to buy 49% stake in Mahindra Susten

The Ontario Teachers’ Pension Plan (OTPP) is in advanced talks to acquire a roughly 49 per cent stake in Mahindra Susten, the renewable energy unit, people familiar with the development said. . OTPP, one of Canada’s largest pension funds, is likely to pay ₹2,300 crore for the stake, valuing the company at ₹4,600 crore including debt, they said, adding that both parties have signed an exclusivity clause.

This is the third attempt in the past two years by the Mahindra Group to offload a stake in Mahindra Susten. Investment bank Avendus Capital advises Mahindra Susten after a sale process in fiscal 2020 led by Rothschild failed despite negotiations with Brookfield for a 100% acquisition.

Mahindra Susten was created to build solar farms as part of the National Solar Mission. Originally part of its internal incubation wing, Mahindra Partners, it was transformed into a separate entity by diversifying into engineering, procurement and construction (EPC), operations and maintenance, rooftop solar panels, data management and software services for third parties. third party developers such as ReNew Power, Azure, SB Energy and others.

OTPP declined to comment. A Mahindra spokesperson told ET that the company “will not be able to participate” in the story.

Mahindra Susten’s revenue fell 55% to ₹952 crore in FY21 from a year earlier as net profit fell to ₹6 crore from ₹42 crore. Covid-induced disruptions resulted in the loss of several construction days in the first half of FY21, the postponement and cancellation of a few overseas projects, and a slow mobilization of existing projects under construction, according to a report by India Ratings. Debt rose to ₹719 crore at the end of March 2021 from ₹466 crore the previous year.

As an independent power producer, Mahindra Susten has a total portfolio of solar projects with a capacity of 1.2 GW across the country. Its main operational assets include a 337.50 MW farm at Rewa, a 175 MW project at Bikaner, an 84.50 MW power station at Charanka, Gujarat, and a 59.8 MW power station at Telangana. As one of the top two independent solar EPC companies in the country, its portfolio includes projects, both executed and under construction, with a peak capacity of 4.2 GW.

A deal will mark OTPP’s debut in India’s renewable energy space. The Canadian fund has a strong presence in the Indian roads sector and has so far stayed away from the booming cleantech arena, which has seen its peers CPPIB, CDPQ dominate. OTPP was one of the contenders to acquire Actis’ renewable energy platform in India, Sprng Energy, which was acquired by Shell. OTPP, which has net assets worth $36 billion in infrastructure globally, plans to invest an additional $16 billion over the next five years.

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