APG, IFC, AIIB Compete for $250 Million Stake in Mahindra Susten's InvIT

22 Aug 2023 , 02:31 PM

Dutch pension fund APG Asset Management, International Finance Corp (IFC) of the World Bank, and Asian Infrastructure Investment Bank (AIIB) are competing to invest up to $250 million (Rs 2,080 crores) in Mahindra Susten’s renewable infrastructure investment trust (InvIT), according to sources familiar with the matter.

Mahindra Susten encompasses the renewable-focused engineering, procurement, and construction (EPC) division of Mahindra Group, which has constructed over 4 GW of renewable capacity. It also includes an independent power production (IPP) unit with approximately 1.54 GW of operational solar plants. The entirety of this 1.54 GW will be transferred to the InvIT. The portfolio’s enterprise value is estimated to be around $1 billion.

‘APG, IFC, and AIIB are presently engaged in conducting due diligence on the assets within the InvIT,’ one source revealed. The deal is anticipated to finalize within the next two to three months. The transaction will involve a combination of primary and secondary share sales, resulting in a minority stake of approximately 35% in the InvIT.

The inclusion of a new investor aligns with regulatory requirements mandating an InvIT to have a minimum of five shareholders. This move assists the InvIT in meeting such stipulations. ‘Susten will subsequently bring in local investors like mutual funds or family offices with smaller investments to fulfill the minimum shareholder criteria,’ the source added.

The Canadian fund Ontario Teachers’ Pension Plan Board (OTPP) currently holds around 30% of Mahindra Susten, a stake acquired in September 2022 for Rs 2,371 crore ($300 million). OTPP’s stake in Mahindra Susten will continue into the InvIT. However, responses from the Mahindra Group and AIIB are yet to be received. APG and IFC have declined to comment. Axis Capital, Kotak Investment Bank, and Avendus Capital are serving as advisors to Mahindra Susten for this transaction.

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