Brookfield Considers Significant Stake in Mahindra Susten Assets

NEW DELHI : Canada-based Brookfield Asset Management Inc. is seeking a substantial stake in Mahindra Susten, two people with knowledge of the development said.

Avendus Capital is managing the sale process of the potential deal which values ​​Mahindra Susten at an enterprise and equity value of approximately 7,000 crores and 1,700 crore, respectively, the people said, requesting anonymity. Mahindra Susten has a growing engineering, procurement and construction (EPC) business, in addition to 1.5 gigawatts (GW) of solar assets.

“Brookfield is seeking to acquire a significant stake in Mahindra Susten at the holding company level. This includes EPC, utilities and C&I (commercial and industrial) activities,” said one of the two people quoted above.

Brookfield has over $20 billion in assets under management in India and over $690 billion in assets globally.

Mahindra Susten builds and sells solar energy projects and also offers diversified services in the field of renewable energies and clean technologies. The development follows parent company Mahindra and Mahindra Ltd’s earlier announcement to unlock value in its units, including Mahindra Susten, by bringing in new investors.

The sale process saw participation from companies including Torrent Power, European alternative asset manager EQT and O2 Power backed by Temasek, and Amplus Energy; and follows an earlier offer from Brookfield to buy Mahindra Susten. Mint announced on February 9, 2021 that Brookfield Asset Management had signed an exclusive agreement to purchase the business from Mahindra Susten.

“Mahindra Susten is one of our growth gems. It is a key contributor to our global leadership on climate change. We have no intention of giving up the majority, but we will consider partners who can help us grow the business faster,” a Mahindra Group spokesperson said in an email response.

Spokespersons for Brookfield Asset Management and Avendus Capital declined to comment.

There is continued interest in India’s green energy space amid a growing emphasis on environmental, social and governance (ESG) investments. At the COP-26 summit in Glasgow last November, India announced plans to increase its power generation capacity from non-fossil fuels to 500 GW by 2030.

Sanjeev Aggarwal, founder and chief executive of Amplus, declined to comment. Email queries to spokespersons for Torrent Power on Saturday and O2 Power on Sunday also went unanswered.

Mahindra Susten had previously executed two separate programs to divest its assets, one managed by EY to sell its solar projects under construction and EPC business, and the other managed by Rothschild to sell its operating solar assets. While private equity firm Actis Llp, among others, was earlier in the fray for Mahindra Susten’s EPC business and solar assets under construction, operational projects have attracted interest from the National Investment and Infrastructure Fund (NIIF ) Indian and the Canada Pension Plan Investment Board (CPPIB). Mahindra Susten sold around 160 MW of solar projects to CLP India in February 2020.

At the COP26 summit, Prime Minister Narendra Modi pledged to meet half of India’s energy needs from renewables by 2030 and reduce India’s carbon emissions by one billion tonnes by 2030.

As reported by Mint earlier, India is also working on a so-called “green tariff” for consumers who want to source all of their electricity needs from renewable energy sources. The plan proposes to help electricity distribution companies take advantage of the low prices prevailing for solar and wind power projects compared to conventional fuel sources such as coal.

Furthermore, the Union budget presented last month provided for an additional allocation of 19,500 crores for the Production Linked Incentives (PLI) program for manufacturing high-efficiency solar modules.

This is in addition to the A 4,500 crore PLI program for solar PV modules which was announced earlier and which was to add capacity of 10 GW of integrated solar PV panel manufacturing plants and bring in direct investment of around 17,200 crore.

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