ReNew Power to be Publicly Listed on the Nasdaq, Valued at $8Bn

Sumant Sinha led Renew Power Private Limited, the country’s leading renewable energy generator has started the process to achieve a listing at the NASDAQ market in the US via the SPAC (Special Purpose Acquisition Company) route.

As of December 2020, ReNew had a total capacity of close to 10 GW of wind and solar power assets across India, including commissioned and committed projects. renew power Nasdaq

The SPAC in this case is RMG Acquisition Corporation II. According to the official announcement, the pro forma consolidated & fully diluted enterprise value of the transaction is approximately $8 billion and it is expected to close in the second quarter of 2021, subject to customary closing conditions.

This is a landmark transaction as it’s the first major overseas listing of an Indian company via the SPAC route, currently a very popular investment vehicle option in Wall Street.

So just what is a SPAC? A SPAC or special purpose acquisition vehicle is a shell company and its sole aim is to raise capital via an IPO (initial public offering) to acquire a private business at a later date and then take it public without going through the traditional route of IPOs In this transaction, RMG Acquisition Corporation II is one such shell company.

Upon closing of the transaction, the combined company would be named ReNew Energy Global PLC and would be publicly listed under the symbol “RNW”. The transaction should enable Renew Power to access global markets more effectively, besides providing an exit to many of its legacy investors, who have been looking for an exit after investing over the years.

An earlier domestic IPO by Renew had been deferred in 2018 after issues over valuations. The Goldman Sachs-backed firm is known to have been looking at a listing again, with Thailand’s PTT Group also looking to acquire a significant part of the stake from Goldman sachs, according to reports. With the new SPAC arrangement, it looks like that deal is off for now.

Well-known Silicon Valley Investor Chamath Palihapitiya, has been mentioned among the backers for the deal. Chamath has also got his own SPAC. There are no plans to make any executive changes with ReNew’s leadership continuing, especially founder Sumant Sinha as Chairman & Chief Executive Officer of the combined company.

Funds received as part of the deal will be used to support ReNew’s growth strategy, including the buildout of its contracted, utility-scale renewable power generation capacity, as well as to reduce debt. ReNew’s management, and its current group of stockholders, including Goldman Sachs, the Canada Pension Plan Investment Board (CPP Investments), Abu Dhabi Investment Authority, and JERA Co., Inc. (JERA), among others, who together own 100% of ReNew, will transfer a majority of their equity into the new company and are expected to represent approximately 70% of the effective company ownership upon transaction close.

“The Indian renewable energy sector has grown rapidly over the last decade,” said Sumant Sinha, Founder, Chairman & Chief Executive Officer of ReNew. “During this time, ReNew has been a driving force in making sure that the sources of this growth are sustainable, and also economically competitive. Over the next decade, ReNew plans to maintain its track record of market share growth, and contribution to the greening of the Indian power sector, and to help meet the Indian government’s ambitious renewable energy targets. Over time, we will expand our capabilities even further, with utility-scale battery storage, and customer-focused intelligent energy solutions. ReNew’s vision is to enhance its position as a global leader in the clean energy space, to continue leading India’s ongoing clean energy transition, and to assist in deepening electrification and decarbonisation of the Indian economy.”

The pro forma consolidated & fully diluted market capitalisation of the combined company would be approximately $4.4 billion at the $10 per share PIPE ( private investment in public equity) subscription price, assuming no RMG II shareholders exercise their redemption rights. Gross cash proceeds are estimated to be approximately $1.2 billion, comprised $855 million from the PIPE and approximately $345 million of cash held in trust by RMG II, before any adjustments due to potential redemptions by RMG II shareholders.

Other than Chamath Palihapitiya, the upsized PIPE was anchored by marquee institutional investors including funds and accounts managed by BlackRock, BNP Paribas Energy Transition Fund, Sylebra Capital, TT International Asset Management Ltd, TT Environmental Solutions Fund, and Zimmer Partners. ReNew Power Nasdaq

RMG Acquisition Corporation II  raised $345 million in its December 14, 2020, IPO. RMG II is sponsored and led by the management team of Jim Carpenter, Bob Mancini, and Phil Kassin, who together have over 100 years of combined principal investment, operational, transactional, and CEO and public company board-level leadership experience.