Brookfield eyeing significant stake in Mahindra Sustain’s assets

Avendus Capital is driving the sale process for a potential deal that values ​​Mahindra Sustain as a venture and at near-equity value 7,000 crore and 1700 crore, respectively, said people requesting anonymity. Mahindra Sustain has a growing engineering, procurement and construction (EPC) business apart from 1.5 gigawatt (GW) of solar assets.

“Brookfield Holding is looking to buy a significant stake in Mahindra Sustain at the company level. This includes EPC, utilities and C&I (commercial and industrial) businesses,” said one of the two people cited above.

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

Mahindra Sustain manufactures and sells solar power projects and also provides diverse services in the renewable energy and cleantech sectors. The development follows an earlier announcement by parent Mahindra & Mahindra Ltd to unlock value by bringing in new investors in its units including Mahindra Sustain.

The sale process saw participation from companies including Torrent Power, European alternative asset manager EQT and Temasek-backed O2 Power, and Amplus Energy; and follows Brookfield’s previous bid to buy Mahindra Sustain. Mint reported on 9 February 2021 about Brookfield Asset Management signing an exclusivity agreement to buy Mahindra Sustain’s business.

“Mahindra Sustain is one of our growth gems. It has a significant contribution to our global leadership in climate change. “We have no plans to leave the majority, but we will look at partners who can help us grow the business faster,” a Mahindra Group spokesperson said in an emailed response.

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

Interest in the Indian green energy sector continues to grow amid increasing focus on environmental, social and governance (ESG) investments. At the COP-26 summit in Glasgow last November, India announced plans to increase non-fossil fuel power generation capacity to 500GW by 2030.

Sanjeev Agarwal, founder and managing director of Amplus, declined to comment. Questions emailed to Torrent Power spokespersons on Saturday and O2 Power on Sunday also remained unanswered.

Mahindra Sustain had previously run two separate programs to sell its assets—one managed by EY to sell off its under-construction solar projects and EPC business, and the other handled by Rothschild to sell off its operational solar assets. went. While private equity firm Actis LLP, among others, was earlier in the fray for Mahindra Sustain’s EPC business and under-construction solar properties, operational projects include the National Investment and Infrastructure Fund of India (NIIF) and Canada Pension Plan Investment Board (CPPIB). . Mahindra Susten sold around 160MW 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 cut India’s carbon emissions by 1 billion tonnes by 2030.

As Mint reported earlier, India is also working on a so-called ‘green tariff’ for consumers who want to purchase their entire power requirement from renewable energy sources. The scheme is proposed to help power distribution companies take advantage of the existing low tariffs from solar and wind power projects as compared to conventional fuel sources like coal.

Also, in the Union Budget presented last month, an additional allocation of 19,500 crore for the Production-Linked Incentive (PLI) scheme for manufacturing high-efficiency solar modules.

this is in addition 4,500 crore PLI scheme for solar photovoltaic modules which was announced earlier and expected to add 10GW capacity of integrated solar PV manufacturing plants and bring direct investment of approx. 17,200 crores.