Goldman sells part of stake in ReNew Power's US parent

Mumbai: Goldman Sachs, the single-largest shareholder of ReNew Power, has pared its stake in ReNew Energy Global Power Plc, the Nasdaq-listed parent of ReNew Power, in favour of Canada Pension Plan Investment Board (CPPIB) to comply with regulatory requirements in the US, sources said.

Goldman Sachs sold 18 million Class A shares and 3.4 million Class C shares of the company at $6.50 a share to CPPIB for $139 million. This would strategically take up the Canadian pension fund's voting rights in the company to 26.2% from the current 20.1%. Its economic interest in the company is 14%.

Goldman Sachs' economic interest in the company will go down to 33% from 35.4%. ReNew has different classes of shares, with voting rights only vested with Class A shares.


The transaction was done at a discount to the prevailing market price of $7.49 at Wednesday closing.

CPPIB has also agreed to buy an additional 9 million Class C shares from Goldman Sachs at the same price if approved by all other shareholders for $58.5 million.

Though it was not clear why Goldman chose to sell down at this point, sources in the know said it is to comply with US laws that bar financial institutions such as banks, holding companies to own securities beyond 10 years.

The key shareholders of the company have an agreement among themselves valid for two years from the financial close of the listing that prohibits one from unilaterally selling their stake to a new investor without the permission of the others, but Goldman was allowed a carve-out of a limited number of shares for compliance.

Goldman Sachs, ReNew and CPPIB declined to comment.

The second tranche of the transaction is also to keep GS's shares from going up following the proposed $250 million share buyback announced by the company recently. Coming just six months after its listing, the buyback surprised the market with rating's agency Moody's calling the event "credit negative." Most analysts felt a share buyback will limit the prospects for a company that promised high growth.

"The extent of the credit impact of the shareholder-friendly initiative will depend on whether RPPL will spend the entire amount announced, and if the initiatives identified by its management to restore its liquidity buffer can be successfully executed within a timely manner," said Spencer Ng, vice-president, Moody's Investors Service.

"RPPL has sufficient cash to fund the planned buyback, having raised $610 million equity in August 2021, but the transaction will reduce the liquidity headroom available within its existing capital structure to absorb further delays in revenue collection or to fund its growth projects if capital market conditions remain volatile."

The Wall Street bank that teamed up with Sumant Sinha to create ReNew Power ground up from scratch in 2011 took the company public last year through an $8 billion merger with RMG Acquisition Corporation II, a blank-cheque company. The 'de-SPAC' saw $855 million in new investments from serial blank-check dealmaker Chamath Palihapitiya, funds managed by BlackRock and Sylebra Capital among others.

However, post listing, the stock took a beating and almost halved from its $11 listing price triggering speculation amongst market participants about it being vulnerable to potential takeover interests.