Mahindra, Ontario Teachers’ launch renewable energy InvIT

January 15, 2024: Mahindra Group present in farm equipment, utility vehicles, information technology and financial services businesses in India, and Ontario Teachers’ Pension Plan Board (Ontario Teachers’), a leading global institutional investor, through their associates have co-sponsored an infrastructure investment trust (InvIT) holding assets in the renewable energy space. The InvIT, Sustainable Energy Infra Trust (SEIT), is India’s largest InvIT in the renewable energy space, say the partners. SEIT has raised primary capital of Rs 1,365 crore ($165 million) as part of the initial offer of units (offer). The offer was subscribed by marquee global and Indian investors, including Asian Infrastructure Investment Bank (AIIB). SEIT made its debut on the National Stock Exchange of India (NSE) on January 15.

SEIT has been set up to focus on the growth of the renewable energy sector in India at scale. SEIT holds operational renewable power assets seeded by Mahindra Susten with a generation capacity of approximately 1.54 GWp. The capital of Rs 897.8 crore ($108 million) made available to Mahindra Susten by way of an offer for sale of units of SEIT as a part of the offer will position Mahindra Susten for the next level of growth and development of a future pipeline of renewable energy assets. Mahindra Susten and SEIT, as a part of their growth strategy, have entered into a right Of first offer (ROFO) arrangement, in compliance with InvIT regulations, whereby renewable energy assets developed by Mahindra Susten will be offered for sale to SEIT.

Both Mahindra Group and Ontario Teachers’ had committed to invest up to Rs 3,050 crore ($368 million) and Rs 3,550 crore ($428 million), respectively, into Mahindra Susten and SEIT.

Speaking about the announcement, Anish Shah, group CEO & MD, Mahindra Group, said, “The government has laid down ambitious targets to reduce the carbon intensity of the nation’s economy by 45% by the end of the decade and achieve net-zero carbon emissions by 2070. The listing of SEIT is a testament to the Group’s ability to attract strong external investors. Mahindra Susten has ambitious plans to achieve 5X growth in the next five years and will contribute to both the Groups’ and the nation’s green energy goals. The renewable energy sector will continue to grow and attract investments and we are excited about both Susten’s and SEIT’s role in developing the right ecosystem.”

Deb Hajara, managing director, Infrastructure & Natural Resources at Ontario Teachers’, added, “We are proud to co-sponsor the SEIT alongside our partner Mahindra Susten and to contribute to India’s renewable energy ambitions. This milestone not only reinforces our commitment to invest globally in green and transition assets but also demonstrates the attractiveness of renewable energy investment opportunities in India.”

Avinash Rao, CEO of the Investment Manager to SEIT, commented, “Renewable energy is a core sector for India with significant growth potential. The Government’s focus on renewable and sustainable energy makes the industry very attractive for investments thereby enabling further growth of our portfolio. An InvIT as an instrument is investor friendly and attracts significant interest in operating renewable energy and infrastructure investments in India. We are delighted to have strong sponsors such as Mahindra Group, Ontario Teachers’ as well as AIIB and other marquee investors on board for current assets, and for building our pipeline of future assets.”

Kotak Mahindra Capital Company Limited, Axis Capital Limited and Avendus Capital Private Limited acted as Placement Agents to the transaction. Cyril Amarchand Mangaldas acted as legal counsels to SEIT and the sponsors. S&R Associates acted as legal counsels to the placement agents.

Founded in 1945, the Mahindra Group is one of the largest and most admired multinational federation of companies with 2,60,000 employees in over 100 countries. It enjoys a leadership position in farm equipment, utility vehicles, information technology and financial services in India and is the world’s largest tractor company by volume. It has a strong presence in renewable energy, agriculture, logistics, hospitality and real estate.

Ontario Teachers’ Pension Plan Board is a global investor with net assets of $249.8 billion as at June 30, 2023. The company invests in over 50 countries in a broad array of assets, including public and private equities, fixed income, credit, commodities, natural resources, infrastructure, real estate and venture growth to deliver retirement income for 3,36,000 working members and pensioners.