CEF Insights

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April
Others

Global pension funds in fray for Mahindra Susten InvIT stake

Author
Ruchita Shah

Notable because

Most installed renewable energy (RE) capacity is financed through traditional financing sources, which may not be sufficient to finance upcoming RE capacities. This is where infrastructure investment trusts (InvITs) can come in to fulfil investment requirements. As of April 2023, Virescent Renewable Energy Trust is the only RE InvIT in India, and the success of Mahindra Susten’s InvIT could encourage RE developers to explore InvITs as an alternative financing source.

What to look out for in the months ahead

To achieve its 500 GW RE target by 2030, the Ministry of New and Renewable Energy (MNRE) has directed RE implementing agencies to conduct 50 GW of RE bids each year till 2027–28 to augment RE capacity addition. Given this, the investment requirement will go up. To fulfil it, will RE developers explore the InvITs route?

Valuation of InvITs and investors’ shares in it will be interesting factors to watch out for.