ReNew Power, one of India’s largest renewable energy groups, plans to go public in New York through an $8bn deal with a blank cheque company, as Wall Street’s Spac craze reaches one of Asia’s biggest economies.
The energy company, which counts Goldman Sachs among its backers, will list on the Nasdaq in a deal with RMG Acquisition Corporation II, a special purpose acquisition company (Spac) led by Robert Mancini, a former executive at private equity firm Carlyle.
RMG Acquisition has raised money from several investors, including Chamath Palihapitiya, a former Facebook executive and one of the most prolific Spac backers, and BlackRock, to help finance the deal.
After a record 2020 in which they raised $80bn, Spacs are cementing their status as Wall Street’s hottest investment product. The investment vehicles raise money from investors, list on a stock market and then find a private company to merge with.
While advocates say they can channel money to fast-growing companies and make it easier for businesses to go public, critics say they are overly generous to the Spac’s founders and the sheer volume of deals is raising concerns of a bubble.
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RMG Acquisition’s decision to buy ReNew Power, whose wind and solar operations are spread across 80 Indian cities, signals that US Spacs are now hunting overseas for targets.
India has a stable of more than 30 unicorns and other companies close to securing a valuation of $1bn or above. Companies including Zomato, PolicyBazaar and Delhivery have said their ambition is to launch an initial public offering.
Sumant Sinha, chief executive 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 very fast”.
“ESG listings are now a much bigger theme 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 investment banking at Bank of America, which advised RMG Acquisition on the deal.
Balakrishnan added that he was working on “multiple” transactions with Spacs in the $200m to $1bn range.
“If the company is already registered outside of India, it becomes extremely simple to do a Spac transaction, because it is conceptually no different than a Spac transaction taking place anywhere else in the world,” he said, “It is a big opportunity for Indian companies seeking to access capital markets.”
Akila Agrawal, head of mergers and acquisitions at Cyril Amarchand Mangaldas, one of India’s biggest law firms, said that Spacs were now a “hot subject matter” and that she was advising clients on several deals.
“These Spacs in the US are now sitting on so much cash, emerging markets like India provide targets,” she said. “Spacs are seen as an easier route to listing itself overseas; listing is a tedious process.”