India's largest renewable energy firm ReNew Power on Wednesday agreed to float by merging into a blank-cheque firm listed in the US, a move that will value the combined entity at roughly $8 billion.
Upon closure of the transaction with RMG Acquisition Corporation II, the combined company would be named ReNew Energy Global PLC.
The transaction would help fund medium-term growth opportunities as well as pay down debt.
This will be the biggest deal in India's clean energy sector.
The transaction will be financed through cash proceeds of $1.2 billion, including $855 million from blank-cheque dealmaker Chamath Palihapitiya, funds managed by BlackRock and Sylebra Capital, ReNew said.
The release said that pro forma consolidated and fully diluted market capitalisation of the combined company would be about $4.4 billion.
Founded in 2011, Goldman Sachs-backed ReNew is among the top 15 renewables independent power producers globally by capacity, with a portfolio of more than 100 operational utility-scale wind and solar energy projects across nine Indian states.
The company also owns and operates distributed solar energy projects for more than 150 commercial and industrial customers across India. It presently has over five gigawatt (GW) of operational capacity and an aggregate capacity close to 10 GW (including capacity already won in competitive bids).
Beyond generation of clean power, ReNew has also developed expertise in ancillary areas such as energy storage. Last year, it entered the emerging digital services business with the acquisition of Climate Connect, a Pune-based company that focuses on AI-enabled grid management and load forecasting.
“The Indian renewable energy sector has grown rapidly over the last decade. Over the next decade, ReNew plans to help meet the Indian government’s ambitious renewable energy targets,” said Sumant Sinha, founder, chairman and chief executive of ReNew.
He said that the company will expand its capabilities, with utility-scale battery storage and customer-focused intelligent energy solutions in coming years.
ReNew’s management and shareholders Goldman Sachs, CPPIB, ADIA, and JERA Co will be rolling a majority of their equity into the new company and are expected to represent about 70% of ownership upon completion of transaction.
Sinha will continue to lead the combined entity.
The transaction is expected to close in the second quarter of 2021.
Blank-cheque company RMG raised $345 million through an IPO in December last year.
Morgan Stanley is a banker to ReNew and one of the placement agents to RMG.
Khaitan & Co is acting as the Indian legal counsel for RMG on this transaction.