Canadian & Dutch Pension Funds Eye Stake In Indian Renewable Yieldco

Some of the leading global pension funds are vying for a stake in the latest renewable energy yieldco offering in India.

According to media reports, Canadian pension fund British Columbia Investments (BCI) and Dutch pension fund APG Asset Management are among several investors looking to acquire a stake in Mahindra Susten’s yieldco — commonly called an infrastructure investment trust, or InvIT, in India.

Mahindra Susten, part of the Mahindra Group, houses engineering, procurement, and construction as well as project development businesses. The project development business has 1.54 gigawatts of operational solar power portfolio. All of this is to be transferred to the new InvIT.

Mahindra Susten is reportedly planning to raise up to Rs 40 billion through sale of a minority stake. The company’s portfolio is spread across five states and is tied up in long term agreements of up to 24 years.

The Canadian fund Ontario Teachers’ Pension Plan Board also holds a 30% stake in Mahindra Susten, which it acquired last year for $300 million. It will hold a stake both in Mahindra Susten and the new InvIT.

Mahindra’s will be the third renewable energy-focused InvIT in India. Virescent Energy and AnZen India Energy Yield Plus Trust being the other two — owned respectively by KKR and Eldelweiss. While both of them are privately held, two other power sector InvITs have public holding as well. These are Power Grid Corporation of India’s PGInvIT and KKR’s Indigrid.

As companies look to expand their renewable energy portfolio, many are looking to monetize their operational assets, which offer highly attractive yields to global pension funds and provide much needed capital to parent companies.