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India's Largest Renewable Energy Company Gets SPAC Deal Backed By Palihapitiya Funding

India's Largest Renewable Energy Company Gets SPAC Deal Backed By Palihapitiya Funding

One of the largest clean energy companies in the world is going public with a SPAC deal announced Wednesday morning.

The SPAC Deal: ReNew Power is going public in a deal valuing the company at $8 billion with the SPAC RMG Acquisition Corp II (NASDAQ: RMGB).

The deal is expected to close in the second quarter of 2021. Shares will trade as "RNW" on the Nasdaq if the deal is approved.

An $885 million upsized PIPE was led by investors including BlackRock and Chamath Palihapitiya.

Existing shareholders include Goldman Sachs (NYSE: GS), Abu Dhabi Investment Authority and the Canada Pension Plan Investment Board.

About ReNew Power: ReNew Power has over 100 operational utilities in wind and solar energy across nine states in India. The company owns and operates distributed solar energy projects for over 150 commercial and industrial companies across the country as well.

ReNew Power was the first Indian renewable energy company to hit capacity milestones of 1 gigawatt and 2 gigawatts. The company says it's the only Indian renewable energy company to have 5GW of operational capacity.

Based on current and future operating capacity, ReNew Power is split 52% wind power and 48% solar energy in terms of energy capacity.

The company is the 12th largest global clean energy utility by capacity, according to its presentation.

Related Link: Chamath Palihapitya’s 12 SPAC, PIPE Deals: Tracking 2021 And Lifetime Performance

Growth Ahead: With new deals and contracts in place, ReNew Power is nearing capacity of close to 10GW of renewable energy.

In 2020, ReNew Power entered into the digital service business with the acquisition of artificial intelligence-enabled grid management company Climate Connect.

India’s government is calling for a goal of 450 GW of installed renewable capacity by 2030. The country is number four in the world for renewable power capacity as of 2019. The capacity for solar and wind energy in India is expected to grow from a market share of 9.5% in 2020 to 28.3% share in 2030.

“ReNew is India’s largest clean energy company with scale in wind and solar. They are playing a huge role in moving one of the world’s most populous countries to clean energy,” Palihapitiya said in a tweet. He predicts India will overtake the European Union in 20230 as the third-largest energy consumer.

Financials: The company has predictable cash flows and long-term power purchase agreements.

Revenue for the company was $681 million in fiscal 2020. EBITDA for the company was $567 million in fiscal 2020.

Company projections call for revenue of $699 million in fiscal 2021, $952 million in fiscal 2022 and $1.33 billion in fiscal 2023. The company’s expected compounded annual growth rate of 24.9% from 2020 to 2023 is ahead of many of its peers including NextEra Energy (NYSE: NEE), a leader in North America.

Price Action: Shares of RMG Acquisition Corporation II were up 2% to $11.43.

Disclosure: The author is long shares RMGB.


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