Goldman Sachs-backed renewable energy firm ReNew Power has entered into a definitive agreement to merge with a blank-cheque firm RMG Acquisition Corporation II, which will value the combined entity at about $8 billion. The combined entity, to be called ReNew Energy Global PLC, will be listed on Nasdaq.

A press statement said pro forma consolidated and fully diluted market capitalisation of the combined company would be about $4.4 billion. The transaction is expected to close in the second quarter of 2021, subject to customary closing conditions.

Leading renewable IPP

ReNew is India’s leading renewable energy independent power producer (IPP), and among the top 15 largest renewable IPPs globally by capacity, with a portfolio of more than 100 operational utility-scale wind and solar energy projects spread across nine States. The company also owns and operates distributed solar energy projects for more than 150 commercial and industrial customers across India.

RMG Acquisition Corporation II is a blank-check company formed for the purpose of effecting a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganisation or other similar business combination with one or more businesses. RMG II raised $345 million in its December 14 IPO. RMG II is sponsored and led by the management team of Jim Carpenter, Bob Mancini, and Phil Kassin.

ReNew’s leadership will remain intact, with Sumant Sinha as Chairman & Chief Executive Officer of the combined company, overseeing its strategic growth initiatives and expansion. “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 solution,” Sinha said.

The Board of Directors of the combined company will include representation from ReNew’s existing stockholders, RMG II, and independent directors. Bob Mancini will be the appointee from RMG II to the Board.

Gross cash proceeds from the deal are estimated to be approximately $1.2 billion, comprising $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. Proceeds 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.

Ownership pattern

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 per cent of ReNew today, will be rolling a majority of their equity into the new company, and are expected to represent approximately 70 per cent of the effective company ownership upon transaction close.

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