Mahindra to Acquire 26% Stake in Neon Hybren for Solar Power Project

Mahindra & Mahindra (M&M) has announced its decision to acquire a 26 percent stake in Neon Hybren Private Limited, a renewable energy-focused subsidiary within the group. The move is part of the company’s broader strategy to strengthen its access to clean energy while ensuring compliance with regulatory requirements for captive power consumption.

Neon Hybren is currently working on establishing a group captive solar power plant in Punjab. The proposed facility, with a planned capacity of up to 30 MW AC, will supply electricity directly to M&M under a captive consumption model.

Under India’s Electricity Rules 2005, companies seeking to consume power from captive sources must hold at least 26 percent equity in the generating entity. M&M’s investment is therefore aligned with this requirement, allowing it to qualify as a captive user of the upcoming solar plant.

The acquisition will be carried out through one or more tranches, with a total investment of up to ₹11.17 crore. The transaction will be executed via a preferential allotment of shares, following the signing of a Share Subscription and Shareholders Agreement with Neon and Mahindra Susten Private Limited (MSPL).

Ownership Structure to Remain Largely Intact

Post-investment, MSPL’s shareholding in Neon will reduce from 100 percent to 74 percent, while M&M will hold the remaining 26 percent. Despite this dilution, Neon will continue to function as a step-down subsidiary of M&M. The company has clarified that the transaction falls under related party dealings but will be conducted on an arm’s length basis, in line with regulatory norms.

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Focus on Expanding Renewable Energy Portfolio

Neon Hybren, incorporated in May 2024, operates in the renewable energy space, focusing on power generation, distributed energy solutions, and rooftop solar installations across various segments. Although the company is still in its early stages, with no reported revenue as of March 2025, the planned solar project marks a significant step in scaling its operations.

The acquisition is expected to be completed by 31 December 2026. The funds raised through the equity issuance will primarily be used to support Neon’s future business operations and general corporate purposes.