KKR’s IndiGrid acquires Virescent for ₹4,000 cr

KKR & Co. backed India Grid Trust (IndiGrid), India’s first listed power sector infrastructure investment trust (InvIT), will buy all units of KKR-sponsored Virescent Renewable Energy Trust (VRET) along with the investment manager and project manager, at an enterprise value of ₹4,000 crore.

VRET, India’s first renewable InvIT, on Friday announced signing of definitive agreements for the acquisition.

KKR was earlier planning to sell its 77% stake in VRET along with an 86.4% stake in the investment manager (IM), with JP Morgan running the sale process.

Abu Dhabi-based Multiply Group PJSC, Actis LLP and Jindal Steel and Power were looking to buy the stake. Virescent was set up by KKR in October 2020 to acquire operating renewable energy assets in India and currently has an installed capacity of 538 megawatt (MW). 

InvITs manage income-generating infrastructure assets, typically offering investors a regular yield and a liquid method of investing in infrastructure projects. IndiGrid’s portfolio comprises transmission networks and renewable energy assets comprising 8,468 circuit km of transmission lines, 13 substations with 17,550 MVA capacity, and 100 MW solar generation assets. 

“In September 2021, Virescent became India’s first privately listed renewables-focused InvIT. Recently, it announced its 6th acquisition which will bring its total capacity to 563 MW upon completion,” VRET said in a statement. 

“This follows a competitive sales process that attracted interest from a number of high-calibre investors based in markets across the world,” it added.

Lured by 10% annual growth in power demand, India’s green energy deal space has been seeing intense activity as reported by Mint earlier.

These include Hong Kong’s Gaw Capital Partners’ talks with Atria Power Corp. Pvt. Ltd to buy a majority stake in the Bengaluru-based firm for an estimated equity value of $250 million.

“We are delighted to enter into this landmark transaction with IndiGrid, given our common strategic focus to expand our renewable energy portfolio and synergies across both platforms, after a highly competitive process,” Virescent chief executive officer Sanjay Grewal said.

“An accretive addition, the acquisition will be funded through a combination of internal accruals, debt and further capital raise and is expected to add ~ ₹2,000 million annually to IndiGrid’s NDCF. VRET is an AAA-rated InvIT with a strong institutional framework comprising marquee unitholders such as AIMCO, Utilico, L&T and others. VRET’s assets have ~7 years of operational history and ~18 years of average remaining tenure with Power Purchase Agreements with strong counterparties enabling it to manage a healthy receivables profile,” IndiGrid said.

“The transaction followed a competitive bidding process and is subject to requisite regulatory and unitholder approvals,” IndiGrid said in a statement.

India has an installed power generation capacity of 416 gigawatt (GW), of which renewable energy accounts for 125GW.

India’s hydropower capacity is 46.85GW. Of the country’s green energy capacity, solar and wind power account for 66.78GW and 42.63GW, respectively.

An additional 82.62GW of green energy capacity is under implementation and another 40.89GW of capacity is under various stages of tendering. India has declared the bidding plan to add 50GW of renewable energy capacity annually for the next five years to achieve the target of 500GW by 2030.