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Private equity firm KKR is setting up a private infrastructure investment trust (InvIT) to house operating renewable energy assets it aims to acquire in India, said two people aware of the development, requesting anonymity.

InvITs manage income-generating infrastructure assets offering regular yield to investors and a liquid way to invest in infrastructure projects. They can be either publicly listed on stock exchanges or privately placed to a handful of investors.

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“KKR has started work on setting up a private InvIT under which all the renewable assets they are acquiring will be added. The plan is to shift the already acquired assets into the InvIT and, once they have added a significant mass of assets, they will monetize it by selling units of the InvIT to long-term investors, such as pension funds, sovereign wealth funds, and insurance companies. Investment bank Axis Capital is advising KKR on the structuring of the InvIT," said one of the two people mentioned above.

KKR did not comment on Mint’s queries.

This will be the second InvIT backed by KKR in India. In 2019, KKR, along with Singapore’s GIC, had invested 2,000 crore in India Grid Trust, a listed InvIT that houses power transmission line projects. KKR and GIC hold a 60% stake in the InvIT. KKR is also designated as the sponsor of the InvIT.

While IndiGrid or India Grid Trust started out with only transmission assets, after KKR’s entry, the InvIT has diversified into renewable energy focused on solar assets.

Last month, IndiGrid entered into an agreement to acquire 100% stakes in two 50-megawatts solar projects from Fotowatio Renewable Ventures B.V. (FRV) for an enterprise value of 660 crore.

“Since IndiGrid is also acquiring solar assets and KKR’s other InvIT will also acquire solar assets, one will have to see how they manage the two vehicles independently," said the second person.

In October, KKR had said that it has set up a new platform, Virescent Infrastructure, to manage its investments in the renewable energy space in India. Virescent owns 317MW solar assets in Maharashtra and Tamil Nadu, which were acquired from the Shapoorji Pallonji group for over 1,500 crore. KKR has also entered into definitive agreements to acquire operating solar projects across three states. The projects will also become part of the Virescent platform and will eventually be moved to the InvIT.

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