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ReNew Power, India’s largest renewable energy producer, has agreed to merge with blank check company RMG Acquisition Corp. II.
The deal will give ReNew, backed by Goldman Sachs Group Inc., an enterprise value of $ 8 billion and will close in the second quarter, according to a statement on Wednesday.
A private placement of $ 855 million to support the transaction is raised from investors including serial trader Chamath Palihapitiya, TT International Asset Management, a fund managed by BNP Paribas SA, funds and accounts managed by BlackRock Inc. and Sylebra Capital.
The merger will extend a wave of PSPC cleantech deals in the United States to include India’s growing renewable energy market. India’s demand for electricity is growing as the country strives to reduce emissions and improve air quality.
RMG II was attracted to ReNew status in India’s growing electricity market. “You combine that with the political tailwind, you have a great history here,” Bob Mancini, CEO of RMG II, said in an interview.
India’s demand for electricity is expected to grow by almost 5% per year through 2040, making it one of the fastest growing markets in the world, the International Agency for Human Rights said. energy in a report at the beginning of the month. By comparison, U.S. consumption is expected to grow by about 0.5% per year through 2030, the IEA said in a report in October.
Solar and wind power will account for more than three-quarters of India’s electric capacity additions over the next two decades, according to the IEA. “We are fortunate to operate in a market that is going through a very significant energy transition from coal and increasingly to renewable energy,” said Sumant Sinha, President and CEO of ReNew.
ReNew’s plan to go public through a deal with RMG was reported earlier by Indian newspaper Mint.
RMG, sponsored by Riverside Management Group, raised $ 345 million in its initial public offering, including so-called greenshoe stocks in December. This is part of an unprecedented increase in Special Purpose Acquisition Company, or SPAC, listings that continued this year.
ReNew would receive around $ 610 million in net proceeds after using some of the money to pay off debt and repay existing investors who sell part of their stakes, according to the people. Other investors in the company include the Canada Pension Plan Investment Board and the Abu Dhabi Investment Authority.
India aims to use green sources for 40% of its energy needs by 2030, Prime Minister Narendra Modi said last week. ReNew now has over five gigawatts of clean energy operational capacity.
A huge build-up of renewable energy as the nation targets 450 gigawatts of capacity over the next decade – up from around 91 gigawatts currently – is an investment opportunity of $ 20 billion per year, Modi said last year . By 2040, solar production is expected to account for roughly the same share of India’s energy mix as coal, currently the country’s main source of energy, according to the International Energy Agency.
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