Renew Power may list on Nasdaq at $8-bn valuation

Firm will have a definitive agreement with RMG II for a business combination

Goldman Sachs-promoted renewable power generation company Renew Power will list on Nasdaq through a business combination with RMG Acquisition Corporation II (RMG II). The pro-forma consolidated and fullydiluted enterprise value is expected to be close to $8 billion. In a statement, Renew announced execution of a definitive agreement with RMG II for a business combination.

Goldman Sachs-promoted renewable power generation company Renew Power commenced the process to list on Nasdaq through a business combination with RMG Acquisition Corporation II (RMG II). The pro-forma consolidated and fully-diluted enterprise value is expected to be close to $8 billion. The transaction is likely to close in the second quarter of 2021. In a statement, Renew announced execution of a definitive agreement with RMG II for a business combination. This would result in Renew becoming a publicly-listed company on Nasdaq.

“Total anticipated proceeds of $1.2 billion comprises $855 million, upsized, fully-committed and public investment in private equity (PIPE) in Renew Power and $345 million of gross cash held in trust by RMG II, subject to redemptions.”

“Net primary proceeds of approximately $610 million will be available to fund the company’s growth and pay debt,” said the firm.

RMG II is special purpose acquisition company (SPAC) for effecting a merger, stock purchase or similar business combination with one or more businesses. The company is sponsored by the Riverside Management Group (RMG) and the management team of James Carpenter, Robert Mancini and Philip Kassin.

This is the first ever DESPAC transaction globally, involving a renewable power generating company and first involving an India-based target since 2016. Upon closing the transaction, the combined entity would be named Renew Energy Global Plc and be publicly listed under the symbol ‘RNW’. Renew said the transaction will help the company by funding mediumterm growth opportunities as well as paying down debt.

“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. Over time, we will expand our capabilities even further, with utility-scale battery storage, and customerfocused intelligent energy solutions,” said Sumant Sinha, founder chairman and chief executive officer (CEO), Renew Power. Renew has recently ventured into new areas such as solar manufacturing, power transmission, and power distribution.

It recently participated in a tender for privatisation of power distribution in Dadar & Nager Haveli, Daman & Diu. The company also plans to expand in energy storage and hydrid power projects.

Apart from Goldman Sachs, Renew is backed by equity investors such as Tokyo-based JERA, Abu Dhabi Investment Authority, Canada Pension Plan Investment Board and Global Environment Fund.

The investors, who together own 100 per cent of Renew today, will continue to have majority of equity. They are expected to represent approximately 70 per cent of the effective company ownership upon transaction close.

Goldman Sachs has been looking to exit from its investment for close to two years. The PIPE listing would also provide an easy exit route to investors, said a senior market analyst.

“The transaction re-emphasises strong investor interest in the renewable energy sector with massive growth potential. The deal saw participation from some of the world’s top ESG (environmental, social and governance) investors and opens the door for many more SPAC transactions from India, across sectors,” said Gaurav Singhal, managing director (MD), India Investment Banking, Bank of America. The bank acted as sole financial advisor and lead PIPE placement agent to RMG II. Renew’s leadership will remain intact, with Sinha as chairman & CEO of the combined entity. Bob Mancini will be the appointee from RMG II to the board.

“Our diligence on Renew confirmed the company’s commitment to measured growth through long-term partnerships with Indian central and state government agencies, scale, technological innovation and strong financial position,” said Bob Mancini, CEO and director of RMG II.