US investor KKR-backed Virescent Infrastructure today announced its renewable energy-focused infrastructure investment trust (InvIT) has raised INR4.6 billion (US$62 million) from a group of foreign and domestic investors.
Leading the transaction in the Virescent Renewable Energy Trust (VRET) is Alberta Investment Management Corporation (AIMCo), one of Canada’s largest institutional investment managers, which invested on behalf of its clients. KKR invests in VRET from its Asia Pacific Infrastructure Investors Fund.
The National Stock Exchange defines “an Infrastructure Investment Trust (InvITs) as a collective investment scheme similar to a mutual fund, which enables direct investment of money from individual and institutional investors in infrastructure projects to earn a small portion of the income as a return.”
“The InvIT is designed as a tiered structure with Sponsor setting up the InvIT, which, in turn, invests into the eligible infrastructure projects either directly or via special purpose vehicles.”
KKR set up Virescent in October 2020 to acquire operating renewable energy assets in India. Headquartered in Mumbai, Virescent aims to expand its portfolio of operational clean energy projects chiefly through KKR’s infrastructure fund and will target facilities with stable cash flows from long-term public-sector contracts.
VRET’s initial portfolio comprises nine operational solar projects, with a cumulative capacity of approximately 395 MWp. The assets are located in Maharashtra, Tamil Nadu, Uttar Pradesh, Gujarat, and Rajasthan. In addition, subject to applicable approvals, VRET is in advanced discussions to acquire a 55 MWp portfolio from Focal Energy.
CRISIL and India Ratings have assigned a ‘AAA’ rating with a Stable outlook to VRET’s loan facilities.
VRET is the only Indian renewable energy InvIT and among a few infrastructure companies to have been assigned this highest ‘AAA’ rating, reinforcing its healthy cash flow prospects owing to long-term power purchase agreements at pre-determined tariffs, its track-record of enhanced generation capabilities, a healthy financial risk profile and low leverage supported by adequate liquidity. The ‘AAA’ rating considers the portfolio to grow up to 2 GWp over the next two to three years.
Sanjay Grewal, CEO, Virescent Infrastructure, said, “This incredible achievement is an important milestone in Virescent’s journey. VRET is India’s first renewable energy focused InvIT and one of the few entities in the infrastructure sector to get the highest ‘AAA’ rating from two rating agencies, CRISIL and India Ratings. We look forward to drawing on the global investment management expertise of our investors as we continue to acquire high-quality assets for achieving our initial growth targets. Our endeavor is to support the Government in achieving its medium and long term renewable energy objectives of 175 GW and 450 GW respectively.”
Hardik Shah, Managing Director, KKR Infrastructure, said, “Virescent continues to be an important part of our infrastructure strategy in the Asia Pacific and how we contribute purposefully to India’s ambitious targets in the renewables sector. Investing in VRET alongside AIMCo and other institutional investors will help us to capitalize on this huge market opportunity. We will continue to support Virescent and its management team in providing greater renewable energy solutions to communities across India.”
Ahmed Mubashir, Director, Infrastructure & Renewable Resources at AIMCo, said, “AIMCo is excited to expand its geographic footprint in Asia through its investment in India’s first renewable energy InvIT. VRET’s portfolio of operating renewable energy assets whose economics are underpinned by long-term power purchase agreements are well aligned with our clients’ investment objectives. We look forward to partnering with KKR and Virescent to further grow the platform and provide renewable energy solutions to India in the coming years.”
Axis Capital acted as the lead manager to the issue. Shardul Amarchand acted as the legal advisor and Ernst & Young as the tax advisor.
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