May 13, 2021

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One of India’s Largest Renewable Energy Groups Joins Spac Craze

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ReNew Power, one of India’s largest renewable energy groups, plans to go public in New York City through an $ 8 billion deal with a blank check company, as the craze for Wall Street Spac reaches one of the largest economies in Asia.

The energy company, which counts Goldman Sachs among its backers, will list on Nasdaq an agreement with RMG Acquisition Corporation II, a special purpose acquisition company (Spac) led by Robert Mancini, a former executive of the capital firm -Carlyle investment.

RMG Acquisition has raised funds from several investors, including Chamath Palihapitiya, a former Facebook executive and one of Spac’s most prolific backers, and BlackRock, to help fund the deal.

After a record in 2020 in which they raised $ 80 billion, Spacs are consolidating their status as Wall Street’s most popular investment product. Investment vehicles raise funds from investors, go public, and then find a private company to merge with.

While advocates say they can funnel money to fast-growing companies and make it easier for companies to go public, critics say they are too generous to Spac’s founders and the sheer volume of transactions. raises concerns about a bubble.

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RMG Acquisition’s decision to buy ReNew Power, whose wind and solar activities are spread across 80 Indian cities, indicates that US Spacs are now looking for targets abroad.

India has a stable of over 30 unicorns and other companies on the verge of a valuation of $ 1 billion or more. Companies such as Zomato, PolicyBazaar and Delhivery have said their ambition is to launch an initial public offering.

Sumant Sinha, Managing Director of ReNew Power, said that “we were approached and when we looked at it it seemed to make a lot of sense, the process went really fast.”

“ESG listings are now a much bigger topic outside of India,” he added.

Several Indian companies were now looking to go public outside India via a Spac, said Raj Balakrishnan, head of India’s investment banking at Bank of America, who advised RMG Acquisition on the deal. .

Balakrishnan added that he was working on “multiple” transactions with Spacs in the range of $ 200 million to $ 1 billion.

“If the company is already registered outside of India, it becomes extremely simple to do a Spac transaction, as it is conceptually no different from a Spac transaction that takes place anywhere else in the world. world, ”he said,“ This is a great opportunity for Indian companies seeking to access financial markets. ”

Akila Agrawal, head of mergers and acquisitions at Cyril Amarchand Mangaldas, one of India’s largest law firms, said Spacs is now a “hot topic” and advises clients on several transactions.

“These Spacs in the US now have so much liquidity that emerging markets like India are providing targets,” she said. “Spacs are seen as an easier way to register abroad; registration is a tedious process. “



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