ReNew Power Private Ltd on Tuesday announced the completion of its merger with Nasdaq-listed special purpose acquisition company (SPAC) RMG Acquisition Corp. II (RMG II).
The merger puts an enterprise value of around $8 billion and an equity value of $4.4 billion on the new entity, ReNew Energy Global Plc.
SPACs are publicly traded shell companies that merge with unlisted companies to take them public, skipping the time-consuming conventional route of initial public offering (IPO). Indian green energy firms are exploring this option amid a growing focus on environmental, social and governance (ESG) investing.
“As a result of the business combination, RMG II has become a wholly owned subsidiary of “ReNew Energy Global plc” (the post-combination entity referred to in the remainder of this release as “ReNew”). Commencing at the open of trading on August 24, 2021, ReNew’s Class A ordinary shares and ReNew’s warrants are expected to commence trading on The Nasdaq Stock Market LLC (“Nasdaq”) under the symbols “RNW” and “RNWWW,” respectively,” ReNew Power said in a statement on Tuesday.
The $1.2 billion equity proceeds from the ReNew Power merger with RMG II includes a private investment in public equity (PIPE) deal of $855 million. The PIPE investors include BlackRock, BNP Paribas Energy Transition Fund, Chamath Palihapitiya, Sylebra Capital, TT International Asset Management Ltd, TT Environmental Solutions Fund and Zimmer Partners.
Mint reported on 15 February about ReNew Power’s SPAC plans at a valuation of almost $4 billion, and its discussions with RMG Acquisition owned by Nasdaq-listed SPAC Riverside Capital Management. ReNew Power had shelved its Indian IPO plan in 2019 amid volatility.
“As a result of this transaction ReNew has received $610 million in net proceeds, consisting of funds from RMG II’s former trust account and from a private placement in public equity (PIPE), after redemptions and transaction fees,” the statement said.
ReNew Power operates 6.24 gigawatt (GW) of solar and wind power, with a total capacity of around 10 GW as of 31 December last year. In 2018, it had acquired 1.1GW of wind and solar power assets from Ostro Energy—one of the biggest acquisitions in the Indian renewable energy space.
“The completion of our business combination with RMG II begins a new era for our company, and is a great step forward for enabling further decarbonization of the Indian power sector,” said Sumant Sinha, CEO of ReNew in the statement.
ReNew Power is among the earliest entrants in India’ green economy. ReNew Power’s existing shareholders include Goldman Sachs, Canada Pension Plan Investment Board, Japan’s JERA Co. Inc., Abu Dhabi Investment Authority, GEF SACEF India and Sumant Sinha.
Investors’ interest in India’s green economy continues. A recent case in point being Canadian pension fund Ontario Municipal Employees’ Retirement System’ (OMERS) purchase of 19.4% stake in NYSE-listed Azure Power Global Ltd. for $219 million from IFC and IFC GIF Investment Company. Recently Thailand’s state-owned energy major PTT Group also announced its acquisition of 41.6% stake in Avaada Energy Pvt Ltd for around $454 million.
“The transaction was unanimously approved by RMG II’s Board of Directors and was approved at the extraordinary general meeting of RMG II’s shareholders held on August 16, 2021 (the “Extraordinary General Meeting”),” the statement said.
ReNew Power also plans to invest $1.2 billion to supply round-the-clock 400 megawatt (MW), and has signed the long-pending power purchase agreement (PPA) with state-run Solar Energy Corporation of India (SECI) for the same.
This comes in the backdrop of India’s solar and wind generation recording an all-time high of 43.1GW on 27 July. India has also crossed the 100 GW milestone of installed renewable energy capacity.
India is running the world’s largest clean energy programme to achieve 175 GW of renewable capacity. According to the Central Electricity Authority, by 2030, the country’s power requirement would be 817GW, more than half of which would be clean energy.
This article was first published on livemint.com