PPIB is acquiring the stake in two transactions, it said in a filing. It has made a primary investment of about $200 million through compulsorily convertible preference shares.
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These will be converted into equity whenever ReNew goes for an initial public offering.
The amount of stake involved in this deal will depend on the valuation of the IPO.
In addition, it will buy 6.33% of ReNew’s shares from Asian Development Bank for about $150 million. This transaction, which values the company at $2.37 billion, will give ADB a handsome return for its investment of $50 million made three years ago. At this valuation, the $200 million investment through preference shares should fetch an about 8.5% stake for the pension fund.
CPPIB’s deal is the biggest investment in a renewable energy company in India this year. This surpasses a $200 million investment, again in ReNew, by Japan’s largest utility JERA Co in February for a 10% stake. The JERA investment had valued ReNew at $2 billion.
CPPIB invests the excess funds of the Canada Pension Plan Board. It has been investing in India since 2010, in sectors such as infrastructure, real estate and financial services.
ReNew, which is competing neck and neck with Tata PowerRenewable Energy to be the biggest renewable energy company in the country, has around 2500 MW of commissioned wind and solar energy assets, with another 1000 MW under construction or development.
Since its inception in January 2011, it has attracted a string of marquee investors including Goldman Sachs, Global Environment Fund, Abu Dhabi Investment Authority, JERA and ADB.
The past 18 months have seen a number of acquisitions in this sector with Tata Power’s buyout of Welspun Energy’s renewable portfolio for Rs 9,249 crore in June 2016 being the biggest. Another major acquisition was that of Greenko Energies taking over the 500 MW Indian assets of bankrupt US company SunEdison for $392 million in October 2016.
In June this year, CLP India, a wholly owned subsidiary of Hong Kong-based CLP Holdings bought a 49% stake in Suzlon’s solar subsidiary, SE Solar, for Rs 73.5 crore. In July, Vector Green Energy, the renewable energy arm of IDFC Alternatives, acquired 190 MW of solar assets in seven states from US-based First Solar for an undisclosed amount