Mahindra Group and Ontario Teachers’ Pension Plan Launch India’s Largest Renewable Energy InvIT

Mahindra Group, in collaboration with the Ontario Teachers’ Pension Plan Board (Ontario Teachers’), has introduced a significant infrastructure investment trust (InvIT) named ‘Sustainable Energy Infra Trust’ (SEIT).

Representing India’s largest InvIT in the renewable energy sector, SEIT debuted on the National Stock Exchange on September 15, successfully raising primary capital of ₹1,365 crore ($165 million) through its initial unit offering.

Key Developments

1. Renewable Energy Focus

• SEIT is strategically positioned to concentrate on the expansive growth of India’s renewable energy landscape. It holds operational renewable power assets with a generation capacity of approximately 1.54 GWp, initially seeded by Mahindra Susten.

• The trust operates within the framework of an InvIT, facilitating the pooling of resources for further development and expansion in the renewable energy sector.

2. Capital Infusion and Growth Strategy

• The primary capital of ₹1,365 crore includes investments from global and Indian investors, with significant participation from the Asian Infrastructure Investment Bank (AIIB).

• Mahindra Susten, a key player in renewable energy, received ₹897.8 crore ($108 million) through an offer for sale of SEIT units, providing impetus for its next phase of growth and the creation of a future pipeline of renewable energy assets.

3. Right of First Offer (ROFO) Agreement

• In adherence to InvIT regulations, Mahindra Susten and SEIT established a Right of First Offer (ROFO) arrangement. This ensures that renewable energy assets developed by Mahindra Susten will be offered first to SEIT, aligning with the trust’s growth strategy.

4. Commitments from Mahindra Group and Ontario Teachers’

• Both Mahindra Group and Ontario Teachers’ had committed significant investments of up to ₹3,050 crore ($368 million) and ₹3,550 crore ($428 million) respectively into Mahindra Susten and SEIT.

• The successful listing of Sustainable Energy Infra Trust SEIT underlines the Mahindra Group's ability to attract strong external investors, with ambitious plans to achieve fivefold growth in the next five years.

5. Industry Attractiveness and Future Goals

• The government’s emphasis on renewable and sustainable energy enhances the attractiveness of the industry for investments. SEIT is poised for further portfolio growth, contributing to the nation’s green energy objectives.

• Anish Shah, CEO & MD of Mahindra Group, expressed confidence in Mahindra Susten's ambitious plans and its contribution to both the group's and the nation's green energy goals.

6. Financial and Legal Facilitation

• Kotak Mahindra Capital, Axis Capital, and Avendus Capital Private Limited served as placement agents for the transaction, ensuring successful financial facilitation.

• Legal counsels for SEIT and the sponsors were provided by Cyril Amarchand Mangaldas, while S&R Associates acted as legal counsels to the placement agents.

Beyond the Headlines: Insights into the Future

The launch of SEIT signifies a critical milestone in India's journey towards renewable energy dominance. This collaborative venture between Mahindra Group and Ontario Teachers' sets a powerful precedent for sustainable investing and paves the way for further infrastructure development in the clean energy space. With ambitious growth plans and strong government support, SEIT is poised to be a major driving force in this exciting transformation.