Virescent Renewable Energy Trust (VRET), India’s first renewable energy infrastructure investment trust (InvIT) from KKR’s Virescent Infrastructure, has raised $62 million (Rs 460 crore) from a group of investors led by Alberta Investment Management Corporation (AIMCo), the firms said in a statement.
InvITs manage income-generating infrastructure assets, typically offering investors a regular yield and a liquid method of investing in infrastructure projects.
The Union budget presented earlier this year exempted dividend payments made 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.
Canadian funds have been placing significant India bets and represent the so-called patient capital which seeks modest yields over time. India fits the risk profile given that green energy markets here have matured from the early risk stage.
Some of the major Canadian investors in India are Canada Pension Plan Investment Board, Caisse de dépôt et placement du Québec, Brookfield Asset Management, and Ontario Municipal Employees Retirement System (OMERS).
AIMCo has around 123 billion Canadian dollars worth of assets under management and invests globally on behalf of 32 pension, endowment, and government funds from the province of Alberta.
“The AIMCo Infrastructure group manages a portfolio of over 9.6 billion Canadian dollars in investments, comprising primarily long-term equity positions in Organisation for Economic Co-operation and Development-based infrastructure assets. These assets typically provide essential services to the public, have an operating history, and are either regulated or have highly contracted revenues with potential for long-term capital appreciation. AIMCo infrastructure investments are intended to match long duration real return asset characteristics with inflation-indexed pension liabilities,” said the statement.
Virescent was set up by KKR in October 2020 to acquire operating renewable energy assets in India. 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.
“VRET’s initial portfolio comprises nine operational solar projects, with an aggregated capacity of approximately 395 megawatt peak (MWp). The assets are located in Maharashtra, Tamil Nadu, Uttar Pradesh, Gujarat, and Rajasthan. Subject to applicable approvals, VRET is in advanced discussions to acquire 55 MWp portfolio from Focal Energy,” said the statement.
Solar and wind generation recorded an all-time high of 43.1 gigawatt (GW) on 27 July, in a reaffirmation of New Delhi’s push for green energy sources. India has reached 38.5% of its installed power capacity from non-fossil fuels and this will go up to 66% by 2030, according to the government.
“VRET is India’s first renewable energy-focused InvIT and one of the few entities in the infrastructure sector to get the highest AAA rating from two rating agencies, CRISIL and India Ratings. We look forward to drawing on the global investment management expertise of our investors as we continue to acquire high-quality assets for achieving our initial growth targets,” said Sanjay Grewal, chief executive of Virescent Infrastructure.
“The AAA rating considers the portfolio to grow up to two gigawatt peak (GWp) over the next two to three years,” said the statement.
The investment manager of IndiGrid, an infrastructure InvIT sponsored by Sterlite Power Grid Ventures Ltd, is majority owned by KKR. InvITs were also proposed by the government as an alternative fundraising route for state-run companies to manage their funding requirements without having to depend on government support.