Virescent floats first solar InvIT, places 400 Mw assets under pvt trust

InvIT to hold nine solar energy projects of 400 MWp in five states; definitive agreements signed for 76 MWp

KKR backed Virescent Infrastructure has floated the first infrastructure investment trust (InvIT) in the green power space. It will be a private Invit for which they have sought the approval for the Securities Exchange of India.

It is in the process of acquiring a portfolio of operational solar assets of close to 76 MWp at different locations including Patan (Gujarat), Jodhpur (Rajasthan) and Mohaba (Uttar Pradesh). The power purchase agreements (PPAs) for these assets are with state-owned counterparties. These assets would be vested in the InvIT.  

The InvIT aims to achieve approximately 1.5 GW of assets in the next two to three years.

CRISIL has assigned a provisional ‘AAA/stable’ rating for the bank loan facilities of Virescent Renewable Energy Trust (VRET). ‘AAA/Stable’ rating is the highest provisional rating that CRISIL assigns. One of the reasons for the good ratings is the healthy revenue visibility due to long-term PPAs at pre-determined tariffs. Additionally, its track record of enhanced generation capabilities, its healthy financial risk profile, and its expectation of low leverage added to its profile, the company said.

Virescent’s low leverage has resulted in a healthy debt service coverage ratio over its entire debt tenure, supported by adequate liquidity. VRET’s initial portfolio will comprise nine solar energy projects, with an aggregated capacity of approximately 400 MWp. The assets are located in Maharashtra, Tamil Nadu, Uttar Pradesh, Gujarat and Rajasthan.

The portfolio will continue to be largely focused on solar energy assets – with solar assets estimated to comprise approximately 80-90 per cent of VRET’s portfolio -- and that are diversified in terms of location and participating counterparties.

Union finance minister Nirmala Sitharaman in her Budget speech on February 1 allowed tax exemption on debt financing of InvITs by foreign portfolio investors. Sanjay Grewal, CEO of Virescent, said, “The provisional ‘AAA’ CRISIL rating for Virescent’s proposed InvIT opens up a variety of options for us to raise debt financing at competitive rates from various market avenues – including FPIs – to enhance our liquidity position. The ’AAA’ rating is reflective of the strong sponsorship of VRET by KKR, in addition to our prudent business strategy centred on building a diversified portfolio of approximately 1.5 GW over the next two to three years.”

Grewal added that InvITs worth Rs 2 trillion are expected to enter the market over the next five years, and Rs 80,000 crore of InvITs are in the pipeline for launch within a year. “The proposed InvIT of Virescent Infrastructure gives us a first-mover advantage to create new long-term and stable investment opportunities in India’s fast-growing renewable energy market.”

Headquartered in Mumbai, the KKR renewable energy platform Virescent plans to expand its portfolio of operational renewable energy assets by identifying investment opportunities that have stable cash flows stemming from long-term contracts with state and central government counterparties across India.