Global private equity (PE) major KKR has agreed to invest $450 million (around Rs 3,585 crore) in Hero Future Energies (HFE), the renewable energy arm of the Hero Group, both the companies announced on Tuesday.
The majority investment comes from KKR along with co-investment from the parent conglomerate Hero Group, details of which along with the valuation remain undisclosed.
“This investment will position HFE for continued growth and support its efforts to expand its renewable energy capacity and capabilities across technologies such as solar, wind, battery storage, green hydrogen and into new markets over time,” a statement said.
US-based investor KKR makes its investments from its maiden Asia Pacific Infrastructure Fund raised last year with a record $3.9 billion. It followed up this year with a $17 billion Global Infrastructure Fund, that exceeded the initial $12 billion target.
The investment in Hero Future Energies builds on KKR’s extensive experience in India and the renewables sector.
Since 2011, KKR has deployed over $15 billion in equity globally to invest in renewable assets, such as solar and wind, which have an operational power generation capacity of 23 GW as of December 31, 2021, the company said.
KKR sponsors investment funds that invest in private equity, credit and real assets and has strategic partners that manage hedge funds.
In Asia Pacific, KKR sees renewables as core to its infrastructure strategy and seeks to capture the significant opportunities across the region. In 2020, it had set up Virescent Infrastructure, a renewable energy platform to own and operate renewable assets in India.
This year, KKR launched Aster Renewable Energy, a renewables platform to develop, build and operate solar, wind, and energy storage projects in Taiwan and Vietnam, with a view to expand to other markets across the region.
“Hero Future Energies is a pioneer in India’s renewables sector, and has a strong track record of delivering innovative clean energy solutions to support India’s renewable energy ambitions. HFE’s clean energy solutions play an important role in helping companies decarbonize as energy demands continue to grow,” said Hardik Shah, partner at KKR.
Founded in 2012, Hero Future Energies is a leading independent power producer in India with a portfolio of 1.6 GW of operating assets across utility and commercial and industrial sectors.
The independent power producer is present across multiple states in India, Bangladesh, Vietnam, Singapore, Ukraine and the UK. It plans to invest progressively in grid connected solar and wind, rooftop sectors, energy storage and green hydrogen over the next few years in India and internationally.
“KKR’s investment will drive Hero Future Energies’ growth in the rapidly growing renewable energy markets domestically and globally, as well as in new technologies such as battery storage, solar-wind hybrid projects, round-the-clock power, and green hydrogen, among others,” said Srivatsan Iyer, global chief executive officer of Hero Future Energies.
Besides Hero Group, World Bank’s private investment arm International Finance Corporation (IFC), Masdar - also known as Abu Dhabi Future Energy Co., picked up 20% stake for $150 million in November 2019.