Monday, July 22, 2024

AIIB to Lead Rs 2,500 Crore Funding Round in Mahindra-OTPP’s Green InvIT for Sustainable Energy Infra Trust

The Sustainable Energy Infra Trust, an infrastructure investment trust (InvIT) supported by the Mahindra Group and backed by an Asian Infrastructure Investment Bank (AIIB)-led funding round, is set to raise Rs 2,500 crore. AIIB will act as the anchor investor, leading the round with an investment of approximately $80 million (Rs 665 crore), while domestic institutional investors are expected to contribute around $60-70 million (Rs 500-600 crore). The deal is anticipated to be formally closed and announced in early January. The rest of the funding will come from Mahindra Susten and the Ontario Teachers’ Pension Plan (OTPP) as sponsor commitments.

The Sustainable Energy Infra Trust will accommodate 1.54 gigawatts (GW) of solar assets. This investment from AIIB is the initial tranche, and there are expectations of further investments as additional assets are incorporated into the InvIT by the sponsors. AIIB is also expressing interest in investing in debt instruments issued by the InvIT to refinance debt at the operating asset level.

The funds raised will primarily be used to refinance the existing debt associated with the solar projects housed under the InvIT, including the repayment of loans provided by Mahindra Susten. As of August 31, the total debt of the InvIT portfolio was reported at Rs 4,797.7 crore, according to a draft placement memorandum filed with the Securities and Exchange Board of India (SEBI). Additionally, aside from equity funding, the InvIT intends to raise debt, which will also be utilized for repaying existing loans.

Mahindra Susten’s businesses encompass the conglomerate’s renewable-focused engineering, procurement, and construction (EPC) unit, boasting over 4 GW of capacity constructed. The independent power production (IPP) unit, with approximately 1.54 GW of operational solar plants, will transfer its entire capacity to the InvIT. Emails sent to AIIB and OTPP did not receive a response, and the Mahindra Group declined to comment on the matter.

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