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KKR-backed Virescent acquires solar assets of Focal Energy

Global private equity major KKR-backed Virescent Infrastructure has acquired 55 MWp (Megawatt peak) of solar assets from Focal Energy, which is backed by international investors such as Israel-based Pitango Venture Capital and Federmann Group.  

The acquired assets are spread across three states and have a mix of Central Government and State Government off-takers, the company said in a statement.

The financial details of the cash-based transaction remained undisclosed. 

In 25 November, Virescent Renewable Energy Trust (VRET) had signed an agreement for acquisition of 100% in Globus Steel & Power Pvt Ltd, Focal Energy Solar One India Pvt Ltd, Focal Energy Solar India Pvt Ltd, and SunBorne Energy Rajasthan Solar Pvt Ltd. The agreement was also inked for an indirect acquisition of 66% in Focal Energy Solar Three India Pvt Ltd. 

Besides solar, New Delhi-based Focal Energy has assets in the hydro and biomass segments. Focal Energy’s other investors include Israel-based Migdal Group, Poalim Capital Markets and Vital Capital Fund, a $500-million impact-investing private equity fund focused on developing nations, primarily in sub-Saharan Africa.

Overall, Virescent now manages 13 operating projects spread across seven states in India, with more than 50% exposure to tier 1 counterparties including SECI, NVVN, and GUVNL, the company added. 

In a separate statement, KKR said, “We look forward to drawing on the global investment management expertise of our Sponsor KKR & Co. Inc. as we continue to acquire high-quality assets for achieving our initial growth targets.” 

Mumbai-headquartered Virescent was established in 2020 as VRET as India’s first renewable energy infrastructure investment trust (InvIT). InvITs manage income-generating infrastructure assets, typically offering investors a regular yield and a liquid method of investing in infrastructure projects. 

Sponsored by US-based investor KKR and Co, it was set up to acquire operating assets and leverage investment opportunities in the fast-growing renewable energy sector in India. 

Virescent’s portfolio includes 394.35 MW of solar assets located in Maharashtra, Gujarat, Rajasthan, Uttar Pradesh and Tamil Nadu. 

In May this year, Virescent announced it completed the acquisition of 76 MWp of Indian solar assets from Singapore’s Sindicatum Group. These assets are also spread across three states and benefit from long-term power purchase agreements with government off-takers. 

VCCircle was the first report in April this year, that KKR was looking to buy the assets spread across Gujarat, Rajasthan and Madhya Pradesh. 

Virescent recently raised equity and debt capital for its other planned acquisitions which are under various stages of diligence. 

Recently, VRET raised RS 2,150 crore of debt from listed non-convertible debentures (NCDs), long term debt financing and through working capital. 

In September, it raised $62 million (Rs 460 crore) from a group of investors led by Alberta Investment Management Corporation (AIMCo).

The renewables space has seen some large transactions, especially in the solar energy sector.

Earlier this year, KKR closed its maiden Asian infrastructure fund hitting the hard cap at $3.9 billion (Rs 28,646 crore). The fund has a broad mandate to invest across emerging and developed countries in the Asia-Pacific in segments including renewables. 

In October, Global PE firm Actis LLP hit the final close of its fifth Energy fund at $4.7 billion for investments in the renewables sector. 

Some of the other clean energy platforms in India backed by private equity investors include Actis Llp’ Sprng Energy and European alternative asset manager EQT and Singapore’s state investment firm Temasek Holdings Pte’s O2 Power. 

In April, Radiance Renewables acquired solar rooftop assets of 152.5 MW capacity for Rs 536.5 crore. 

Last year, KKR-backed IndiGrid, the country’s only publicly listed InvIT (infrastructure investment trust) in the power sector, said it had acquired two assets operated by FRV Solar Holdings. 

In April last year, KKR had bought five solar energy assets from Shapoorji Pallonji Infrastructure Capital for $204 million.

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