virescent: KKR’s two InvITs – IndiGrid and Virescent – merge in first-of-a-kind deal

virescent: KKR’s two InvITs – IndiGrid and Virescent – merge in first-of-a-kind deal

India Grid Trust (IndiGrid), the KKR-owned Infrastructure Investment Trust (InvIT) in the Indian power sector, has taken over Virescent Renewable Energy Trust, also floated by the same fund. The deal, the first of its kind, valued Virescent at ₹4,000 crore.

IndiGrid will acquire all units of Virescent along with its investment manager and project manager, stated a company release.

Sebi approval is being sought for the transaction, said a Virescent executive. The law currently doesn’t allow such mergers.

Virescent’s consolidated FY23 revenue stood at ₹537 crore with an Ebitda of ₹425 crore. It distributed a total ₹350 crore as dividend in FY23, adding up to ₹720 crore since InvIT formation in 2020, stated the release.

Competitive sale process
The transaction follows a competitive sale process that attracted interest from investors across the world, it said. About half a dozen domestic and global energy developers, including Jindal Steel and Power, Actis and an arm of International Holding Corporation of Abu Dhabi, were there in the last stage apart from Indigrid.Virescent was established in 2020 to acquire renewable energy assets in India. It has 16 operating solar projects totalling 538 MW of capacity with assets under management (AUM) of Rs 4,121 crore as of March 31. In September 2021, Virescent became India’s first privately listed renewables-focused InvIT.

In 2021, Virescent raised Rs 460 crore in a round led by Alberta Investment Management Corp (AIMCo), one of Canada’s largest institutional investment managers. Terra Asia Holdings II Pte is sponsor of the trust and affiliated with KKR.

According to Crisil, around 90% of the Virescent portfolio is covered by power purchase agreements (PPAs) with a pre-determined tariff for a tenure of 25 years. The remaining capacity has been tied up for 12 years from the start date of commercial operations. This provides revenue visibility, minimises offtake risk and ensures steady cash flow, it said.

Set up in 2016, IndiGrid is India’s first and largest InvIT in the power transmission sector. It owns, operates, and manages transmission networks and renewable energy assets that deliver reliable power. It owns 17 power projects with transmission lines of more than 8,416 ckm, 14 substations with 17,550 MVA transformation capacity, and 100 MWAC of solar generation capacity.

“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,” said Sanjay Grewal, chief executive officer, Virescent. “As India marches towards becoming the most populous country, renewable energy solutions will grow in its importance as an energy source for its citizens and economic progress.”

India’s major energy-focused InvITs are Indigrid, Virescent and Edelweiss’ AnZen India Energy Yield Plus Trust. The Mahindra Group also plans to float an InvIT for Mahindra Susten, its renewable energy platform.

KKR-owned Indigrid and Edelweiss’ AnZen hold portfolios of power transmission and renewable energy assets, while Virescent is a pure renewable energy trust.

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