This is first-ever debt issuance by a renewable energy InvIT in India
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NEW DELHI :
Virescent Renewable Energy Trust (VRET), India’s first renewable energy infrastructure investment trust (InvIT) set up by KKR-backed Virescent Infrastructure, has raised ₹2,150 crore through long-term debt financing instruments.
“VRET raised ₹1,000 crore in its debut issuance across three-, five- and seven-year tranches. This transaction marks the first-ever issuance by a renewable energy InvIT in India, thereby establishing a new yield curve. The company will primarily use the proceeds to refinance existing debt at the SPV (special purpose vehicle) level as well as to fund future acquisitions," VRET said.
“VRET has also tied up an additional ₹1,000 crore of long-term financing from L&T Finance. This ensures complete debt tie-up for VRETs immediate near-term acquisition pipeline. Further, VRET has got a working capital facility of ₹150 crore from Tata Capital to enhance its liquidity position and meet its credit rating requirements," it said.
InvITs manage income-generating infrastructure assets, typically offering investors a regular yield and a liquid method of investing in infrastructure projects. The Union budget exempted dividend payments to real estate investment trusts (Reits) and InvITs from tax deduction at source and enabled debt financing of InvITs and Reits by foreign portfolio investors.
There is a growing interest in Indian green energy InvITs, amid increasing focus on environmental, social and governance investments.
Investors’ interest in India’s green energy space also stems from the government’s proposal of a minimum share of renewable energy in the overall consumption by an industrial unit or an establishment. This assumes significance given that in India’s total electricity demand load pattern, industrial load is the largest and accounts for 41.16%.
Also, to soothe investor concerns amid the logjam on contracts with Punjab, Gujarat, and Andhra Pradesh, the Centre has notified rules for ensuring “timely recovery of costs due to the change in law".
“This incredible achievement is an important milestone in VRET’s journey, demonstrating our debt fund raising capabilities at competitive pricing with different instruments and maturity profiles and reposes the faith of lenders in VRET," said Sanjay Grewal, chief executive officer, Virescent Infrastructure.
“We look forward to working closely with our lenders as we continue to acquire high-quality assets for achieving our initial growth target," he said.
Recently, VRET had also raised $62 million in a round led by Alberta Investment Management Corp. Virescent has an installed capacity of 394 megawatt from nine operational projects and aims to acquire companies to ramp up its portfolio.