FCC

Adani, Torrent, Shell, and Actis competing for KKR's energy InvIT

2023-01-12

Virescent Renewable Energy Trust, an infrastructure investment trust (InvIT) owned by KKR India is being sought after by a group of about six domestic and international energy developers for an enterprise value of $550 million. These developers include Adani Green, Torrent Power, Shell, and Actis. The trust has a portfolio of 16 operational solar power plants spread across 7 states, totalling 538 MW in capacity. This could be the first sale of an InvIT in India if the purchase goes through.

According to the sources previously mentioned, the competitors have recently made non-binding offers and are currently in negotiations with KKR and its advisors JP Morgan, who will move forward with a smaller group of shortlisted candidates for the next stage of negotiations and due diligence.

Around 9 operating solar power projects totalling 394 MW were included in the trust's initial portfolio of assets. These projects were located in Maharashtra, Tamil Nadu, Rajasthan, Gujarat, and Uttar Pradesh. The trust then added 7 more operating solar power projects totalling 144 MW in Punjab, Madhya Pradesh, and Rajasthan. With central and state government offtakers, all 16 projects have long-term Power Purchase Agreements (PPAs) for 25 years.

According to a recent study, there is a strong InvITs pooled structure that produces a well-diversified mix of assets, and the cash flows from the pool of 14 assets, which have a three to nine year operational track record. The projects are spread out over seven states, which minimises the effect of any one-time resource-related hazards at remote places.